India: Imports surge amid higher gold purchases, trade deficit widens
May 13, 2013
In April, exports increased 1.7% over the same month last year in USD terms. The print represents a notable deceleration compared to the 7.0% expansion registered in March, but nonetheless, marks the fourth consecutive increase in shipments abroad. The 12-month sum of exports up to April dropped 3.8% over the same period last year, which followed a decline of the same magnitude in the 12 months up to March.
Meanwhile, imports swung from a 2.9% decline in March to an 11.0% expansion in April, the result of a surge in imports of gold - India's second largest imported commodity by value after oil and a key contributor to the country's trade deficit. Consequently, the trade deficit widened to USD 17.8 billion in April (April 2012: -14.0 billion), which pushed the 12-month sum of the trade balance to a USD 201 billion shortfall. The reading exceeded both the USD 197 billion deficit recorded in March and the USD 185 billion shortfall recorded in the same month last year.
The government has set an export target of USD 325 billion for this fiscal year. In order to achieve this goal, in the Foreign Trade Policy, the government announced a package worth an estimated INR 30 billion (USD 550 million) to stimulate the country's exports.
FocusEconomics Consensus Forecast panellists anticipate exports to increase 9.8% in the FY 2013/14, to reach USD 330 billion. In FY14/15, the panel sees exports expanding 15.7%.
Author: Ricardo Aceves, Senior Economist