India: Trade deficit widens in February

Recently released data related to India’s external sector showed that the trade deficit totaled USD 8.9 billion in February, which was a greater shortfall than the USD 6.5 billion gap recorded in February 2016 (January 2017: USD 9.8 billion deficit). The rolling 12-month trade deficit widened from USD 98.0 billion in January to USD 100.4 billion in February, the largest gap in eight months.

The deterioration in trade data came on the back of a surge in imports growth. Imports expanded 21.8% over the same month last year, the largest growth rate since September 2014 (January: +10.7% year-on-year), and totaled USD 33.4 billion. The increase was due largely to rising prices for oil imports.

Meanwhile, exports growth also soared, rising from a 4.3% expansion in January to 17.5% in February, the best reading since October 2011. A pick-up in engineering exports helped boost India’s shipments abroad to total USD 24.5 billion.

FocusEconomics Consensus Forecast panelists expect exports to grow 6.5% in FY 2017 to reach USD 286 billion. In FY 2018, the panel sees exports expanding 8.7% to USD 311 billion.