The balance oftrade is the difference between a country’s imports and exports of goods and services over a certain period of time. The largest component of the country’sbalance of payments is the trade balance.
When export value is greater than importvalue, then that is a trade surplus. On the contrary, whenthe import value exceeds the export value,then it is a trade deficit. Economists usually use the balance of trade as astatistical tool to help them understand the relative advantages between countries’ economies and the flow of trade among the nations.The table above shows the trade balance of Denmark from year 1995 to year2016.From the table above, the Danish highest trade surplus is 16,200.8 M.$ in year 2011.The lowest trade surplus from year 1995 to year 2016 is 2,140.
1 M.$ in year 1998, followed by5,144.5 M.
$ in year 2007. Denmark is self-sufficient in energy producing oil, wind,natural gas and bio energy. Its main export products are machinery, chemicals and foodstuffs. Denmark imports aremainly themachinery and equipment, rawmaterials and semi manufactures for industry, foodstuffs and chemicals.The Danish trade surplus raise to 9,083.8 M.$ in year2003 from 2,140.1 M.
$ in year 1998. This means that the export value of Denmarkis greater than import value during year 1998 until year 2003. The prosperityperiod come to an end at year 2003 since the trade surplus narrowed to 5,144.5 M.$ in year 2007 from 8,922.6 M.$in year 2004.
Thus, there is a prolonged downward phase of depression in year2004 to year 2007. After the prolonged downward phase, the recession end atyear 2007. The depress trade balance in Denmark is recovered and the raising oftrade surplus is leading to an upturn from year 2007 until year 2011. TheDanish trade surplus raise from 5,144.
5 M.$ in year 2007 to16,200.8 M.
$ in year 2011. The Tradebalances go downward again at year 2012 until year 2016. The latest Denmark’s trade balance shown from thetable above is the amount of 13,544.4 M.$ in year 2012 narrowed to 9,597.
4 M.$ in the year 2016.Generally, government debt as apercent of GDP is used by investors to measure the ability of a country torepay its debt in the future, thereby affecting the country’s borrowing costsand government bond yields. If a country fails to repay its debt, it willdefault on its debt, which can cause panic in both domestic and internationalmarkets. A high debt to GDP ratio could make it more difficult for a country topay external debts and may lead creditors to seek higher lending interestrates. The higher the debt to GDP ratio, the less may the country will pay backits debt and the higher the risk of default.
While governments may try to reduceits debt to GDP ratios, government borrowing may increase in times of war orrecession. A country is generally considered stable if it can continue to payinterest on its debt without refinancing or undermining economic growth.The table above shows the government debt to GDP of Denmark from year 1995 to year 2016.Denmark recorded a government debtequivalent to 37.70% of the country’s Gross Domestic Product in 2016. Thetable above shows that the averageof government debt to GDP in Denmarkis 47.10% from year 1995 until year2016. The government debt to GDP of Denmark is reaching an all time high of 73.
20% in year 1995. The lowest record of 27.30%in Danish government debt to GDP isin year 2007.The Danish government debt to GDP ratio is narrowed to 48.50% in year 2011 from 73.20% in year 1995.
Thismeans that Denmark could pay back the external debt easily and the economicgrowth will go more stable. In year 2002, the government debt to GDP ratio had a sudden rising to 49.10%. Then, there is a prolongeddownward phase of decreasing in government debt to GDP ratio on 49.10% in year 2002 until 27.30% in year 2007.After the prolonged downward phase, the government debt to GDP ratio is rising again from year 2007 until year 2011. The GDP ratio is risingto 46.
10% in year 2011 from 27.30% in year 2007. This means that it is moredifficult for Denmark to pay back the external debts and this may lead the creditorsto seek for higher lending of interest rates. The Danish government debt to GDP ratio is narrowed again in year 2011 until year 2016.
The GDP ratio isreducing from 46.10% in year 2011 to 37.70% in year 2016. Lastly,Denmark’s position in terms of percentage of gross domestic product hasimproved in 2016 compared with the rest of the world.