India: Trade deficit swells to record high in November
Latest reading: Merchandise exports contracted 4.8% in annual terms in November, contrasting October’s 17.2% jump. Meanwhile, merchandise imports jumped 27.0% over the same month last year in November (October: +3.6% yoy) marking the strongest reading since August 2022 on a surge in deliveries of gold.
As a result, the merchandise trade balance deteriorated from the previous month, recording a record USD 37.8 billion deficit in November and exceeding market expectations (October 2024: USD 27.0 billion deficit; November 2023: USD 21.3 billion deficit). This record trade deficit is likely to hurt the Indian rupee ahead, which our panelists currently expect to appreciate from current levels by the end of December 2025.
Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 272.6 billion deficit in November, compared to the USD 256.1 billion deficit in October.
Panelist insight: Despite November’s downbeat reading, EIU analysts are optimistic on the outlook for the external sector:
“We expect the current-account deficit to narrow to an average of 0.5% of GDP in 2024-25, from 0.9% of GDP in 2023. This will be driven by a rebound in exports in emerging sectors like electronics, driven by strong consumer demand from major markets such as the US, as well as traditional product categories such as pharmaceuticals. The robust surplus on the services account and high remittance inflows will prevent a further widening of the overall deficit.”