India: Trade deficit shrinks to 30-month low
October 11, 2013
In September, the trade balance registered a USD 6.8 billion deficit. The reading was significantly less than the USD 17.1 billion shortfall reported in the same month last year and represents the lowest deficit since March 2011.
The lower deficit in September showed that exports increased 11.2% over the same month last year (August: +13.0% year-on-year), which represents the third consecutive month of double-digit growth in exports. Exports continue to benefit from a weak Indian rupee. Meanwhile, imports declined a hefty 18.1% in September (August: -0.7% yoy). Oil imports decreased on the back of a moderation in global crude prices. In addition, gold imports fell sharply in September due to fresh restrictions.
The government has set an export target of USD 325 billion for this fiscal year. In order to achieve this goal, the government announced a package worth an estimated INR 30 billion (USD 550 million), which is intended to stimulate the country's exports.
FocusEconomics Consensus Forecast panelists expect exports to increase 11.2% in FY 2013/2014, reaching USD 329 billion. In FY 2014/2015, the panel sees exports expanding 6.8% and reach USD 352 billion.
Author: Ricardo Aceves, Senior Economist