India: Trade deficit narrows in January

Recently released data related to India’s external sector showed that the trade deficit totaled USD 7.6 billion in January, which was a smaller shortfall over the USD 7.9 billion deficit observed in the same month last year. For the 12 months up to January, the trade deficit recorded USD 125.5 billion, which was broadly unchanged from the 125.8 billion gap tallied in the 12 months up to December.

The narrowing in the trade deficit showed that imports contracted 11.0% annually in January, which was a significantly larger drop than the 3.9% plunge tallied in December. January’s drop was largely the result of the low-oil-price environment. Accordingly, oil imports totaled USD 5.0 billion, which represented a 39.0% decrease compared to the same month last year.

Meanwhile, exports fell 13.6% in January, which was a smaller fall than December’s 14.8% contraction and marked the best result in six months.

FocusEconomics Consensus Forecast panelists expect exports to contract 10.3% in FY 2015, reaching USD 278 billion. In FY 2016, the panel sees exports expanding 6.0% to USD 294 billion.