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Foreign partners may retaliate with their own protective measures.

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Improve domestic activity within the country.

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Raise the cost of the foreign country’s foreign competition

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To help stabilise a persistent balance of payments trade deficit, the government could devalue its currency.

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(government policies that restrict international trade to help domestic industries, i.e by placing tariffs or restrictions on imports of other countries)

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Lowers the cost of exports = more competitive in the global market

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Lower the relative prices of goods internationally devaluating other countries currencies as well

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Research Grants

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Tax breaks (reduction in taxes or, i.e. excluding income from the tax return)

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To increase the number of exports

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Lower interest rates on loans

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The supply-side policy can improve the competitiveness of the economy and help make exports more attractive. Therefore, it can improve the current account position, but it may take some time to have an effect.

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Decrease the purchasing power of foreign currencies

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Supply-side policies to achieve balance stability 

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Supply-side policies to achieve balance stability 

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Aim: to stabilize a trade deficit