India: Trade deficit widens in March

Recently released data related to India’s external sector showed that the trade deficit totaled USD 10.5 billion in March, which was a greater shortfall than the USD 4.4 billion gap recorded in March 2016 (February 2017: USD 8.9 billion deficit).

The deterioration in trade data came on the back of a surge in imports growth. Imports expanded 45.4% over the same month last year, the largest growth rate since August 2011 (February: +21.9% year-on-year), and totaled USD 39.7 billion. The increase was due largely to rising prices for oil imports. Meanwhile, exports growth also soared, rising from a 17.5% increase in February to a robust 27.6% expansion, the best reading since October 2011. A broad-based pick-up across sectors helped boost India’s shipments abroad to total USD 29.2 billion.

For FY 2016, the trade deficit slimmed slightly from USD 117.1 billion in FY 2015 to USD 105.9 billion. The improvement was driven by faster export growth which outpaced imports during the year. Imports posted a slim 0.2% expansion, due to low oil prices at the start of the year.

FocusEconomics Consensus Forecast panelists expect exports to grow 7.3% in FY 2017 to reach USD 289 billion. In FY 2018, the panel sees exports expanding 8.0% to USD 313 billion.