Weaker exports widen trade deficit

Mumbai: Weaker exports widen trade deficit. November trade deficit at US$23.3 bn surpassed the previous high of US$22.6 bn in September. The deficit widened mainly due to a sharper fall in exports than imports, possibly reflecting rising Covid cases in some of the key markets. Even as the trade deficit is likely to stay high in H2, we pencil in some moderation from current levels. We revise up our FY22 CAD/GDP estimate to 1.6 per cent with USD-INR in the range of 74.5-76.5 in the near term, says a report by Kotak Institutional Equities.

Exports in November fell by 16.2 per cent mom (27 per cent growth yoy) to US$29.9 bn (October: US$35.7 bn). Non-oil exports also fell by 14.4 per cent mom (18.3 per cent growth yoy) at US$26.1 bn. Compared to November 2019, exports were higher by 16.1 per cent and non-oil exports by 18.9 per cent.

After plateauing around US$33-35 bn over the past few months, exports dropped sharply possibly due to rising cases in Europe and other economies as well as supply shortages impeding order deliveries. Top exports (over November 2020) were petroleum products (145 per cent), plastic and linoleum (43 per cent), cotton yarn/fabrics, made-ups, handloom products, etc. (41 per cent). In 8MFY22, exports at US$263.7 bn increased by 52 per cent over 8MFY21 and by 25 per cent over 8MFY20, the report added.