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India December trade: Upside surprise on exports
Asia-MAP score for exports: 10 (2, 5)
2 out of 5 for relevance to GDP
5 on a scale of -5 to +5 for surprise relative to consensus
Merchandise imports declined significantly by 11.0% yoy in December, after an 11.2% yoy increase in
November. On a sequential basis, imports grew 2.9% qoq compared to 0.8% yoy growth in the previous month.
On a sequential basis, non-oil imports fell 5.4% qoq, whereas oil imports rose 14.7% qoq.
Merchandise exports grew by 22.8% qoq in December, from 14.5% qoq in November. On a yearly basis,
exports grew 36.4% yoy compared to 26.5% yoy growth in the previous month.
The trade deficit narrowed to US$2.6 billion from US$8.9 billion in November due to stronger exports and a
significant decline in imports.
Non-oil import demand was surprisingly weak in December, suggesting weaker activity in the month. We
expect GDP growth in 3QFY11 (October-December 2010) to moderate to 8.4% from 8.9% in the first half of FY11.
There are, however, unfavorable base effects at play due to a sharp jump in imports in December 2009, when it
grew 45.2% yoy. The upside surprise on exports suggests rising demand from developed markets. We do not think
that the low trade deficit in December will be sustainable, due to rising oil prices, and the waning of base effects.
Our estimate of the current account deficit for FY11 remains at 4% of GDP, but there are some downside risks to
this number.
We continue to believe that the INR will weaken against the USD due to sustained high current account deficits and
weaker balance of payments. Our 3, 6, 12-month USD/INR forecasts remain at 46, 46.2 and 47 respectively.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India December trade: Upside surprise on exports
Asia-MAP score for exports: 10 (2, 5)
2 out of 5 for relevance to GDP
5 on a scale of -5 to +5 for surprise relative to consensus
Merchandise imports declined significantly by 11.0% yoy in December, after an 11.2% yoy increase in
November. On a sequential basis, imports grew 2.9% qoq compared to 0.8% yoy growth in the previous month.
On a sequential basis, non-oil imports fell 5.4% qoq, whereas oil imports rose 14.7% qoq.
Merchandise exports grew by 22.8% qoq in December, from 14.5% qoq in November. On a yearly basis,
exports grew 36.4% yoy compared to 26.5% yoy growth in the previous month.
The trade deficit narrowed to US$2.6 billion from US$8.9 billion in November due to stronger exports and a
significant decline in imports.
Non-oil import demand was surprisingly weak in December, suggesting weaker activity in the month. We
expect GDP growth in 3QFY11 (October-December 2010) to moderate to 8.4% from 8.9% in the first half of FY11.
There are, however, unfavorable base effects at play due to a sharp jump in imports in December 2009, when it
grew 45.2% yoy. The upside surprise on exports suggests rising demand from developed markets. We do not think
that the low trade deficit in December will be sustainable, due to rising oil prices, and the waning of base effects.
Our estimate of the current account deficit for FY11 remains at 4% of GDP, but there are some downside risks to
this number.
We continue to believe that the INR will weaken against the USD due to sustained high current account deficits and
weaker balance of payments. Our 3, 6, 12-month USD/INR forecasts remain at 46, 46.2 and 47 respectively.
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