India Trade deficit remains in double digits

August 3, 2010 · Author: · Category: exim 

In June, India’s trade deficit eased a tad to USD 10.5 bn from USD 11.3 bn in May 2010, although higher than the average of ~USD 9 bn over the past 12 months. Thus, Q1FY11 trade deficit has reached ~USD 32 bn, highest on record, excepting the quarter ending September 2008, when it was at ~USD 43 bn on the back of exceptionally high oil prices. Relatively slower growth in exports compared to imports (particularly oil imports) in the first three months of the current fiscal led to widening of the trade deficit. Sharp appreciation in INR on REER basis over the past 12 months and relatively weaker external demand environment are contributing to this worseing trend

Exports in Q1FY11 amounted to ~USD 51 bn, same as the previous quarter, but significantly higher than same quarter of the previous year. In June, exports recovered to USD 17.7 bn after falling in the previous two months. However, Y-o-Y, exports grew ~30%, the slowest pace in the past five months as base effects have begun to fade.

Imports, meanwhile, came in at ~USD 28 bn in June, marginally higher than USD 27.4 bn in May. Y-o-Y, imports dipped further to ~22% from ~38% in May and ~44% in April, suggesting fading of the base effect. Within imports, oil imports eased while non-oil imports climbed after falling in the previous two months, suggesting healthy domestic economic momentum. Against these trends, the non-oil trade deficit came in at USD 2.2 bn versus USD 2.5 bn in the previous month.

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