India’s merchandise trade deficit narrowed to a 13-month low of USD 17.4 bn in Feb-23 from USD 17.7 bn in Jan-23
Download ReportQuantEco Research || Feb-23 Merchandise Trade - Deficit on a muted path
India’s merchandise trade deficit narrowed to a 13-month low of USD 17.4 bn in Feb-23 from USD 17.7 bn in Jan-23. While both exports and imports increased sequentially, the relative outperformance of exports over imports had a moderating influence on overall trade deficit. Taking into consideration (i) lower than expected trade deficit print for two months in a row, (ii) upward revisions to past monthly export figures, and (iii) continued robustness in services exports, we now revise lower our forecast for FY23 current account deficit to USD 86 bn from USD 106 bn earlier. For FY24, the current account gap is likely to lower further to USD 72 bn (revised lower from USD 90 bn earlier) on account of lower commodity prices, normalization of domestic supply idiosyncrasies in certain items, and anticipation of moderation in domestic growth momentum. There is considerable uncertainty surrounding FY24 forecasts owing to potential contagion risks from US banking sector to other asset classes and economies.