India Trade Gap Narrows to Seven-Month Low as Demand Ebbs

(Bloomberg) --

India’s trade deficit narrowed to the lowest in seven months in September as a deepening economic downturn sapped demand for imports.

The gap between exports and imports was at $10.86 billion last month from $13.45 billion in August, data released by the Commerce Ministry showed Tuesday. That was lower than the median estimate for a $12.9 billion deficit in a Bloomberg survey of 20 economists.

• Imports declined 13.9% from a year ago to $36.9 billion, compared with a 13.5% fall in August. Exports fell 6.6% to $26 billion, against a 6.1% drop in the previous month

Key Insights

• The Reserve Bank of India and the government have been acting in tandem to support the industry and attract new investments in the economy that’s been expanding at its slowest pace in six years. The downturn coincides with talks of an impending global recession
• Easing trade tensions with the U.S. and forging new pacts, such as the China-backed Regional Comprehensive Economic Partnership, are also crucial for India as it seeks to more than triple its annual exports to $1 trillion in the next five years
• Calls are growing for more measures to revive domestic demand, absence of which led to a contraction in India’s factory output for the first time in more than two years in August

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• Oil imports dropped 18.3% from a year earlier to $8.98 billion, while gold imports declined about 51% to $1.28 billion
• To read the full statement on trade numbers, click here

--With assistance from Tomoko Sato and Devidutta Tripathy.

To contact the reporter on this story: Vrishti Beniwal in New Delhi at vbeniwal1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Karthikeyan Sundaram, Atul Prakash

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