India: Trade deficit narrows in December; April–November import figures revised down
Latest reading: Merchandise exports decreased 1.0% year on year in December, following November’s 5.1% decrease. Meanwhile, merchandise imports increased 4.9% over the same month last year in December (November: +16.0% yoy).
As a result, the merchandise trade balance improved—by more than expected by the market—from the previous month, recording a USD 21.9 billion deficit in December compared to November’s shortfall of USD 31.8 billion (December 2023: USD 18.8 billion deficit).
Meanwhile, a prior mistake by the statistical office meant that import figures for April–November were revised downward, with the value of inbound shipments of gold USD 11.7 billion lower in the period than originally estimated. The data may be revised further in future, with the government forming a panel to ensure that trade data is reliable. This could affect calculations for vital macroeconomic data, such as the current account balance and GDP.
Lastly, the trend pointed down, with the 12-month trailing merchandise trade balance recording a USD 262.2 billion deficit in December, compared to a USD 259.0 billion deficit in November.
Panelist insight: Goldman Sachs’ Santanu Sengupta and Arjun Varma said:
“We revised our current account deficit estimate for CY24 to $30bn (0.8% of GDP) from $43bn (1.1% of GDP previously) on the back of a revision in gold imports data lower in the latest trade data release. Additionally, remittances are tracking higher, while primary income outflows are tracking lower (vs. our earlier estimates). With this revision lower in our CY24 estimates, we revised our current account deficit for CY25 at 1.0% of GDP ($42bn) vs. $55bn earlier on the back of higher remittance receipts (vs. our earlier estimates).”