← GlossaryTrade & Currency
Terms of Trade
Terms of trade compare the prices of a country’s exports with the prices of its imports. If import prices rise faster, such as during an oil shock, the terms of trade worsen and the country effectively becomes poorer.
Why It Matters
For an oil importer like India, expensive oil is a terms-of-trade loss.
In India
The 2026 oil shock worsened India’s terms of trade, meaning the same exports bought fewer barrels of oil.
Related Terms