India's merchandise trade printed its widest deficit in 5 months at USD 30.4 bn in Jun-26 vis-à-vis USD 28.2 bn in May-26.
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India's merchandise trade printed its widest deficit in 5 months at USD 30.4 bn in Jun-26 vis-à-vis USD 28.2 bn in May-26. While both exports and imports registered a sequential contraction (10.6% MoM and 3.5% MoM, respectively), they expanded on annualized basis (15.5% YoY and 31.0% YoY, respectively) despite a challenging geopolitical backdrop, marked by the Middle East crisis. Excluding the volatile impact of crude and precious metal prices, core exports and core imports registered a healthy expansion of 12.9% YoY and 18.9% YoY in Q1 FY27, reflecting underlying resilience. On the geopolitical front, risks surrounding the Middle East conflict have been oscillating between truce and hostilities amidst expectation of an eventual peace deal between the US and Iran. However, low-impact skirmishes continue to cast doubt over any immediate near-term resolution. Over the medium-term, FTAs concluded with the UK, Oman, New Zealand, and the EU, alongside the prospective India-US trade deal, are expected to bolster India's export potential and mitigate the concentration risk. Assuming an average Brent price of USD 80-85 pb for FY27, we project India's current account deficit at 0.9% of GDP.