Analysts at Nomura note that India’s export growth moderated to 14.3% y-o-y in July from 18% in June, while import growth increased to a 14-month high of 28.8% from 19.5%, contributing to a record-high trade deficit of USD18bn from an upwardly revised USD17.1bn in June (from USD16.6bn previously).
Key Quotes
“Core (non-oil, gold) import growth sharply increased to 18.4% from 8.4% in June. We estimate that the recent recovery in both exports and imports is driven by a pickup in volumes. However, we believe that downside risks to export growth remain due to weaker global growth outlook, although currency depreciation is a tailwind at the margin.”
“Import growth is likely to remain elevated in the near-term due to high oil prices, but we expect weak rupee and domestic slowdown to moderate imports in coming quarters.”
“Overall, we expect the current account deficit to widen to 2.8% of GDP in FY19 from 1.9% in FY18.”
“We expect balance of payment (BOP) funding to remain a challenge in FY19 as the basic BOP (current account + net FDI) is negative and portfolio flows also remain negative.”
Share
