Visible Trade. Image credit

Visible Trade. Image credit

ZIMSEC O Level Commerce Notes:Visible and Invisible trade

Invisible trade

  • Trade in services only e.g. tourism, freight, insurance.
  • Calculated for given periods of time, usually one year.
  • Invisible balance= exported services value-minus imported services value.
  • For example Tourists coming to Zimbabwe $25 million.
  • Banking services provided by Zimbabwean banks to foreigners $56
  • Tourists from Zimbabwe to other companies. $14 million
  • Banking services provided to Zimbabweans in other countries. $ 117 million.
  • The invisible balance= (25+56) – (14+17)
  • $50 million.
  • In this case the invisible balance is said to be favourable.
  • A favourable balance is also called a surplus.
  • This means Zimbabwe exported more services than it imported.
  • If the balance is negative it is said to be unfavourable.
  • An unfavourable balance is also known as a deficit.
  • This would mean Zimbabwe imported more services than it exported.

Visible trade

  • is trade in goods only e.g. minerals such as diamonds.
  • It is calculated for a given year.
  • Visible balance ( Balance of trade)= Exported goods value-imported goods value
  • For example in a given year:
  • Zimbabwe exported goods to other countries worth $4.9 billion.
  • It imports goods worth $9 billion.
  • The balance of trade (BoT)=4.9-9
  • $-4.1 billion.
  • This is an unfavourable balance.
  • It is also known as a deficit.
  • It means Zimbabwe exported less goods ( in value terms) than she imported.

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