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Informist, Thursday, Dec. 5, 2024

MUMBAI – India's current account deficit is seen at 1.6% of GDP in Jul-Sept, a seven-quarter high, says India Ratings and Research. The rating agency expects the current account deficit to be near $15 billion, or 1.6% of the GDP, in Jul-Sept, up from a deficit of $9.7 billion, or 1.1% of the GDP, in Apr-Jun.

"Sequentially, goods exports were down to a 12-quarter low of $103.0 billion in Jul-Sept (lower than Ind-Ra's expectations of $108 billion)," India Ratings said in a report. The goods exports declined after a gap of three quarters due to subdued demand from major exporting partners such as China, Singapore, Bangladesh and Australia." 

Merchandise imports in Jul-Sept were around $177.2 billion, in line with India Ratings' forecast. The report said while imports of consumer durable goods and intermediate goods grew, the imports of infrastructure and primary goods declined in Jul-Sept. The growth in the value of six of the top 10 imported principal commodities was stronger than their volume growth, the report said.

For Apr-Oct, India's merchandise trade deficit was $164.65 billion, up 10.0% from $149.67 billion in the year-ago period. Exports in Apr-Oct totalled $252.28 billion, up 3.2% compared with Apr-Oct of 2023, while imports were 5.8% higher at $416.93 billion.

Further, the rating agency said it expected the goods trade deficit in Oct-Dec to hit a record high of $80 billion on account of a sharper rise in India's imports than exports. "Ind-Ra therefore expects the merchandise exports to increase 6.6% on year to around $112 billion in Oct-Dec. The merchandise imports are expected to grow faster at 9.2% on year to around $192 billion."

The services trade, on other hand, is expected to surge to a record high of around $49 billion in Oct-Dec, up 8.8% on a yearly basis. "The global trade in commercial services grew at a robust 8% on year during Apr-Jun. The global services PMI stood at 53.1 in October 2024, remaining in expansion for the past 22 months."

An ease in monetary policy by the US Federal Reserve and the European Central Bank is likely to have supported the recovery in global trade, the report said. The World Trade Organization expects a strong pickup in global trading activity in the second half of 2024. The World Trade Organisation projected the merchandise trade volume to grow 2.6% in 2024 and 3.3% in 2025.  End

Reported by Sourabh Kumar

Edited by Akul Nishant Akhoury

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