By BW CFO WORLD Online Bureau
It is expected that the trade deficit would increase in the second half of the financial year as economic activities are starting to normalise
Kotak Economic Research reported that imports in August, increased further as economic activity continued to normalise and exports continued to be strong but have stagnated at their current levels, for now, leading to widening of the trade deficit.
“We expect the current trend to continue in 2HFY22 and maintain our FY2022E CAD/ GDP estimate at 1.1 per cent. We continue to pencil in USD-INR within 72.5-74 in the near term,” it said.
Exports in August increased to $33.1 billion (45.2 per cent) but declined sequentially by 6.5 per cent. Non-Oil exports increased 36.6 per cent being $28.6 million while falling 3.3 per cent sequentially. Compared to August 2019, exports were higher by 27.5 per cent and non-oil exports were higher by 25.5 per cent.
The exports have been stagnating around the current levels after a major boost in March 2021. Top exporters in August were gems and jewelry (88 per cent), engineering goods (58.8 per cent), cotton and handloom products (55.6 per cent), and chemical (35.8 per cent). Imports in August increased 51.5 per cent being equal to $47 billion while increasing sequentially by 1.3 per cent (July: $46.4 billion). Non-oil import was equal to $35.4 billion increasing 43.9 per cent, while increasing sequentially by 5.6 per cent. Compared to August 2019, imports were higher by 18 per cent and non-oil imports increased by 22.6 per cent.
The report concluded, “We expect the overall external sector to remain comfortable but will be subjected to risks from a widening trade deficit, high commodity prices, and policy normalization in the US, and spread of Covid cases”.
(IANS)