India’s merchandise trade deficit presented a shocker for Oct-23 at a never seen before level of USD 31.5 bn.Download Report
QuantEco Research || Oct-23 Merchandise Trade Deficit - A rude shock, soars to a record high
The record trade deficit in Oct-23, was single-handedly driven by broad-based increase in imports – Oil, Gold/Gems & jewellery as well as some manufacturing-oriented imports such as Chemicals, Base metals and Transport equipment. While we expect some normalization in imports in Nov-23, amidst moderation in crude oil prices as well as some reversal of pre-festive bunching up of imports, H2 FY24 is likely to see a sequential widening of merchandise trade deficit vis-à-vis H1. The upward bias is expected on account of convergence of festive and wedding season demand, hardening of international commodity prices, lower reliance on Russia for crude imports, and administrative exim interventions by the government to curb inflationary pressures. Overall, we maintain our forecast for FY24 current account deficit at USD 67 bn, unchanged from FY23 levels, and look for sequential widening of merchandise trade deficit in H2 vis-à-vis H1 of FY24. Having said so, we do expect some normalization in imports in Nov-23, amidst decline in crude oil prices as well as some reversal of pre-festive bunching up of imports.