India’s Trade Gap Narrows as Import Demand Wanes

(Bloomberg) -- India’s trade deficit narrowed in June as a slowing economy and lower oil prices curbed imports.

The gap between exports and imports was $15.28 billion last month, compared with $15.36 billion in May, according to data on Monday from the Commerce Ministry. That was higher than the $15 billion median estimate in a Bloomberg survey of 23 economists.

Key Insights

• Exports fell 9.71% from a year ago to $25 billion, compared with a 3.9% gain in May. Imports declined 9.1% to $40.3 billion, against a 4.3% increase in the previous month.
• The decline in exports is consistent with global trends and the government is “pro-actively” pursuing an export promotion strategy, the ministry said in a statement. Petroleum products, rice cotton, gems and jewelry contributed to the drop, it said.
• Prime Minister Narendra Modi, who returned to office for a second term in May, wants to double exports from the $2.6 trillion economy by boosting manufacturing. But his government has made slow progress in raising local factory output, while weak global growth, and pressure from President Donald Trump to reduce India’s trade surplus with the U.S. are undermining those plans
• Sluggish domestic consumption has pulled economic growth down to a five-year low, and curbed inbound shipments in recent months. Prices of crude oil -- India’s biggest import -- also had an impact. Oil imports dropped 13.3% in June from a year earlier to $11 billion

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• Earlier on Monday, a report showed wholesale prices rose 2.02% in June from a year earlier, the lowest in almost two years, indicating very little inflation pressure in the economy. Together with a weakening economy, the subdued inflation outlook gives the central bank room to continue lowering interest rates this year
• To read the full statement on trade numbers, click here

--With assistance from Tomoko Sato and Anurag Kotoky.

To contact the reporters on this story: Vrishti Beniwal in New Delhi at vbeniwal1@bloomberg.net;Archana Chaudhary in New Delhi at achaudhary2@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Ashutosh Joshi

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