India’s Trade Deficit Widens To A Five-Month High In April 

India’s trade gap widened to a five-month high in April due to lower growth in exports, amid weakening global trade and rising concerns over tensions between the U.S. and China.

The gap between India’s imports and exports stood at $15.33 billion in April compared with $10.89 billion in March 2019, according to a release from the Ministry of Commerce. The deficit was wider than the $13.5 billion forecast in a Bloomberg poll of 21 economists.

The culprit behind the wider deficit was slower export growth.

Exports grew a mere 0.64 percent over last year to $26.07 billion in April. In March, exports were significantly higher at $32.55 billion.

Imports rose by 4.48 percent in dollar terms on an annual basis. Inbound shipments stood at $41.4 billion in April, down from $43.44 billion in the preceding month but higher than the $39.63 billion a year ago.

Trade deficit in April surprised on the upside, according to Gaura Sen Gupta and Indranil Pan, economists at IDFC First Bank. While exports tend to contract sequentially in April, the decline this time was more pronounced due to weak global demand conditions, they said in a report.

But the trend in non-oil non gold imports has been weak for the last six months, averaging at -1.3 percent annually, reflecting weakness in domestic demand conditions, they said. The decline in capital goods was because of continued weakness in the capex cycle.

Import Highlights:

• Oil imports in April 2019 rose by 9.26 percent in dollar terms compared to a 5.55 percent increase the previous month.
• Imports of organic and inorganic chemicals fell by 0.06 percent compared to a fall of 6.35 percent last month.
• Pearl and precious stone imports fell 8.9 percent compared to a 1.03 percent fall last month.
• Gold imports rose by 53.99 percent in April 2019 after growing by 31.22 percent in March 2019.
• Electronic goods imports grew by 3.98 percent compared to a contraction of 5.69 percent in March.

Export Highlights:

• Ready-made garment exports fell 4.4 percent in April 2019 compared to a rise of 15.13 percent last month.
• Petroleum product exports rose 30.75 percent in April 2019 compared to a 6.55 percent increase last month.
• Drug and pharmaceutical exports grew by 4.03 percent compared to 13.6 percent in March 2019.
• Engineering goods exports contracted by 7.07 percent as against a growth of 16.27 percent in March 2019.
• Gems and jewellery exports contracted further by 13.38 percent compared to a contraction 0.37 percent in the previous month.

Gupta and Pan expect the current account deficit to come at 2.2 percent in the ongoing financial year compared to 2.1 percent in the 2018-19, led by a likely revival of imports and weaker exports on account of global trade slump.