India: Merchandise export growth accelerates in May; India retaliates against U.S. GSP revocation
June 14, 2019
Annual merchandise export growth accelerated to 3.9% in May, up from the 0.6% growth in April. Exports in May were supported by a sharp increase in electronic good shipments, in addition to strong external sales of chemicals and ready-made garments. Merchandise imports increased 4.3% in May, down slightly from April’s 4.5% growth. Higher imports in May were largely caused by an 8.2% rise in oil purchases from abroad.
The merchandise trade deficit was USD 15.4 billion in May, which represented a widening compared to the USD 14.6 billion shortfall in the same month a year earlier and the USD 15.3 billion deficit in April. Meanwhile, the 12-month trailing sum of the trade deficit widened to USD 178.8 billion in May from USD 178.0 billion in April.
In other trade news, on 14 June the Indian government announced it was slapping new tariffs on 28 goods imported from the U.S., including almonds and applies. The move was seen by analysts as retaliation to the U.S.’s decision on 31 May to revoke India’s general system of preferences trade designation, which had previously allowed approximately USD 6 billion worth of Indian goods to enter the U.S. market duty free.
India Trade Balance Forecast
Our panelists forecast that exports will expand 7.8% in FY 2019 and imports will rise 7.6%, bringing the merchandise trade deficit to USD 189.0 billion. In FY 2020, we expect exports and imports will expand 7.6% and 6.8% respectively, which would result in a merchandise trade deficit of USD 199.0 billion.
Author: Edward Gardner, Economist