India’s trade deficit is expected to improve in August to about USD 10.3 billion from USD 11.5 billion in July, largely on moderation in export as well as import growth, says a Morgan Stanley report.
According to the global financial services major, the moderation, on a year-on-year basis, is likely owing to higher oil prices and unfavourable base effects.
“We estimate a moderation of export growth to 3.4 per cent year-on-year in August from 3.9 per cent in July and imports of 11.3 per cent in August from 15.4 per cent in July,” Morgan Stanley said in a research note.
The report noted that gold imports are also likely to have remained strong in August at around 61 tonnes (USD 2.5 billion), though lower than the pre-GST levels of about 130 tonnes (USD 5.4 billion).
Besides, non-oil non-gold imports, which is a proxy for domestic demand, is expected to continue to post strong growth. According to official data, India’s trade deficit stood at USD 11.44 billion in July from USD 7.76 billion in the year ago period.
Cumulative export during April-July of 2017-18 rose by 8.91 per cent to USD 94.75 billion while import increased by 28.30 per cent to USD 146.25 billion, leaving a trade deficit of USD 51.5 billion.
Meanwhile, the second part of the Economic Survey, which was tabled in Parliament in August, India’s rising trade deficit and protectionist tendencies on the global front are areas to watch for in the short term.