Indian Economy: April Trade Deficit Narrows Near Two-Year Lows
National News

Indian Economy: April Trade Deficit Narrows Near Two-Year Lows

The Kotak Mahindra Bank in a report on Wednesday maintained its financial year (FY) 2024 current account deficit (CAD)/ gross domestic product (GDP) estimate at 1.6 per cent with room for a positive surprise.

The report added that the current account pressures in FY2024 are expected to be lower, as weaker global demand along with lower global commodity prices will ease goods trade deficit pressures.

“However, we see substantial favourable risks to our CAD and BOP estimates, given the chances of crude prices remaining much below our USD 90/bbl, with CAD/GDP likely around 1 per cent in case crude prices average around USD 80/bbl and harper fall in non-oil imports, which can pull the CAD/GDP below 1 per cent, assuming services trade surplus remain around FY2023 levels,” it added.

It mentioned that the services trade surplus remained firm in April at USD 13.9 billion and is expected to remain steady in FY2024, further easing current account pressures.

The bank stated that external sector risks are skewed to the downside, with the goods trade deficit expected to be narrower in FY2024 relative to FY2023, whereas the services trade surplus remains firm.

Notably, the April goods trade deficit narrowed from March levels (though in line with January to February 2023 levels), led by a sharp fall in non-oil imports.

It also stated that the April services trade surplus remained steady at around USD 14 billion.

India’s exports in April contracted 12.7 per cent year on year (YoY) to USD 34.7 billion and non-oil exports were lower at USD 28.2 billion but remained steady at January to February 2023 levels, March has seasonal year-end effects.

Exports were propped up by engineering goods at USD 9 billion followed by oil exports at USD 6.5 billion, gems and jewellery at USD 2.4 billion and drugs and pharmaceuticals at USD 2.3 billion.

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