Net exports are the value of a country’s exports of goods and services minus the value of its imports.
The formula is exports minus imports. If exports exceed imports, net exports are positive and the country has a trade surplus under this measure. If imports exceed exports, net exports are negative and the country has a trade deficit.
Net exports are one component of the expenditure approach to measuring gross domestic product. The identity is GDP = consumption + investment + government spending + net exports. Imports are subtracted because spending on imported goods may appear in consumption, investment, or government purchases but was not produced domestically.
Net exports are not identical to the current account balance, which also includes income flows and transfers. They are also not a direct scorecard of economic health: trade balances reflect saving, investment, exchange rates, domestic demand, and international production patterns.