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Trade deficit narrows substantially
In March, India’s trade deficit narrowed substanitally to ~USD 5.6 bn, much lower
than ~USD 8.1 bn last month. On an annunal basis, total deficit in FY11 stands at
USD ~105 bn against USD ~110 bn for FY10. Meanwhile, owing to strong
momentum in exports in recent months, non-oil trade balance posted a record
surplus of ~USD 3.8 bn against average monthly deficit of ~USD 2.6 bn in H1FY11
Exports momentum very strong
On the back of strong growth and base effect, exports grew ~38% Y-o-Y against
~5% fall last year. On a seasonally adjusted (SA) sequential basis too, exports have
grown strongly since late last year. After growing at an average 0.5% M-o-M SA
(3MMA) basis in H1FY11, exports picked up pace, growing at ~7% (average) in the
past six months. Going ahead, we expect export growth to moderate from the
current high levels, as global growth seems to be peaking out due to the ongoing
monetary and fiscal policy tightening.
Non-oil imports grow robustly
Imports grew ~22% Y-o-Y in FY11 against a fall of ~8% in FY10. Pick-up in imports
is mainly led by non-oil imports that grew ~24% compared with ~17% growth in oil
imports. Non-oil imports have jumped sharply in H2FY11, growing ~6.0% M-o-M SA
(3MMA) against 0.2% M-o-M SA (3MMA) in H1FY11.
Meanwhile, sharply higher oil prices are now catching up with oil imports, growing
to USD 9.4 bn for March 11 against USD 8.2 bn last month. Oil imports are
expected to grow further as more and more oil contracts get rolled over at current
oil prices. Overall, in FY11, oil imports grew ~17% to ~USD 101.7 bn and oil prices
jumped 45%.
Trade balance expected to widen in coming months
The current growth momentum in exports (~38%) is much above the trend and is
unlikely to sustain. Also, global economy is expected to see some moderation, as
monetary and fiscal policy tightening is adding to pressure on export growth. At the
same time, elevated level of crude prices (due to political tensions in Middle East) is
a major headwind to the trade balance, as India is a large importer of oil
(accounting for ~28% of the total import bill). Accordingly, if crude continues to
remain elevated at ~120 USD/barrel and global growth de-accelerates, trade deficit
is likely to face widening pressure in the coming months.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Trade deficit narrows substantially
In March, India’s trade deficit narrowed substanitally to ~USD 5.6 bn, much lower
than ~USD 8.1 bn last month. On an annunal basis, total deficit in FY11 stands at
USD ~105 bn against USD ~110 bn for FY10. Meanwhile, owing to strong
momentum in exports in recent months, non-oil trade balance posted a record
surplus of ~USD 3.8 bn against average monthly deficit of ~USD 2.6 bn in H1FY11
Exports momentum very strong
On the back of strong growth and base effect, exports grew ~38% Y-o-Y against
~5% fall last year. On a seasonally adjusted (SA) sequential basis too, exports have
grown strongly since late last year. After growing at an average 0.5% M-o-M SA
(3MMA) basis in H1FY11, exports picked up pace, growing at ~7% (average) in the
past six months. Going ahead, we expect export growth to moderate from the
current high levels, as global growth seems to be peaking out due to the ongoing
monetary and fiscal policy tightening.
Non-oil imports grow robustly
Imports grew ~22% Y-o-Y in FY11 against a fall of ~8% in FY10. Pick-up in imports
is mainly led by non-oil imports that grew ~24% compared with ~17% growth in oil
imports. Non-oil imports have jumped sharply in H2FY11, growing ~6.0% M-o-M SA
(3MMA) against 0.2% M-o-M SA (3MMA) in H1FY11.
Meanwhile, sharply higher oil prices are now catching up with oil imports, growing
to USD 9.4 bn for March 11 against USD 8.2 bn last month. Oil imports are
expected to grow further as more and more oil contracts get rolled over at current
oil prices. Overall, in FY11, oil imports grew ~17% to ~USD 101.7 bn and oil prices
jumped 45%.
Trade balance expected to widen in coming months
The current growth momentum in exports (~38%) is much above the trend and is
unlikely to sustain. Also, global economy is expected to see some moderation, as
monetary and fiscal policy tightening is adding to pressure on export growth. At the
same time, elevated level of crude prices (due to political tensions in Middle East) is
a major headwind to the trade balance, as India is a large importer of oil
(accounting for ~28% of the total import bill). Accordingly, if crude continues to
remain elevated at ~120 USD/barrel and global growth de-accelerates, trade deficit
is likely to face widening pressure in the coming months.
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