India's Trade Deficit Stood at $22.12 Billion In May 2023

Despite setting a record in global trade in FY2022-23, India's trade this year has not had an expected start.  In the first month of May 2023, there was a deficit in India's exports and imports.  According to official data, India's exports fell by 10.3% to $34.98 billion from a year earlier in May2022, in May 2023 and imports fell by 6.6% to $57.10 billion.  India's merchandise trade deficit was $22.12 billion in May, according to Reuters export and import data released by the government.  The trade deficit fell to a 20-month low of $15.24 billion in April.

This decline in world trade is very challenging for India.  The deficit has become a risk at a time when India's trade has been setting record numbers since the pandemic.  At the start of the new fiscal year, the shortfall could sway investor sentiment and hurt the local currency's appeal.  Imports in May 2023 were $57.1 billion and service charges were $13.53 billion, total imports in May were $70.63 billion.  And exports were $34.98 billion and service charges were $25.30 billion, total exports in May at $60.28 billion.  The Indian government is giving some concessions to the services sector for now.  India's services exports are on the rise due to a sharp jump in IT and business consulting jobs.  It is projected to rise to $25.3 billion in May.  
In the last two years, India's exports have increased from $500 billion to $767 billion in 2022-23.  Commerce Secretary Sunil Barthwal had earlier said that headaches still persist on the global trade front. Economists expect India's current account deficit to widen in the first quarter of the current fiscal after printing trade deficit data for May 2023.
Aditi Nair, Chief Economist and Head Research & Outreach, ICRA Ltd., said, “While commodity prices led to a 6.6 percent YoY contraction in merchandise imports in May 2023, some key items such as iron and steel, machine tools, machinery, electronic products  , fertilizers and pharma witnessed a year-on-year expansion, leading to a gradual increase in overall imports,” he said, adding “May generally sees higher imports of various items like fertilizers, gold, fuel, etc., as compared to April.  Available trade data for April-May 2023 suggest that the CAD is likely to expand to -$10.  -12 billion in Q1 FY2024 to ~$2 billion expected in Q4 FY2023, while managing to -1.2 percent of GDP,”
Against the US dollar on Thursday, June 14, 2023, the US Federal Reserve signalled further cuts as the domestic trade deficit widened to a five-month high.

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