Trade gap tapers to US$17.4bn

• HDFC securities
• 26 Sep 2018
• Knowledge Centre

India’s trade deficit in August 2018 fell to US$17.4 bn from a five-year high of US$18.02 bn in July 2018, as exports rose to reach US$27.84 bn. The trade deficit in August 2017 was markedly lower at US$12.72 bn.

 

Exports in August 2018 rose 19.2% on account of healthy growth in petroleum products, engineering, pharma, and gems &jewelry shipments. Imports grew 25.41% in August 2018 to US$ 45.24 bn, owing to dearer crude oil shipments. Oil imports for the period under review grew 51.62% to US$ 11.83 bn, and non-oil imports were up 18.17% to US$ 33.41 bn.

 

Gold imports in Aug-18 rose 92.62% to US$ 3.64 bn.

 

However, during the April 2018 to August 2018 period, the trade deficit widened from US$ 67.27 bnto US$ 80.35 bn in the corresponding period of the previous year.During April-August 2018, exports recorded a growth of 16.13% to US$ 136.09 bn, while imports grew 17.34% to US$ 216.43 bn.

 

A publication quoted Ms. AditiNayar, Principal Economist, Icra as saying, “While the merchandise trade deficit eased somewhat in sequential months, it stood at an uncomfortably high US$ 35 bn in July-August 2018, which suggests that the current account deficit is likely to cross 3% of the GDP in the second quarter of FY19. Unless commodity prices recede appreciably from the prevalent levels, Icra expects the current account deficit to widen to US$ 72-77 bn (2.8% of GDP) in FY19 from US$ 48.7 bn in FY18(1.9% of GDP), posing a key macroeconomic concern."

 

Oil imports during the April-August period this fiscal grew 53.35% to US$ 58.81% bn, and non-oil imports were up 7.84% to US$ 157.62 bn. The non-petroleum and non-gems and jewelry exports in April-August FY19 were US$ 99.24 bn, as compared with US$ 87.60 bn for the corresponding period in FY18, an increase of 13.28%.