External Trade - Trade deficit at all time high::Edelweiss

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The trade deficit has widened to a record ~USD19.6bn in Oct against ~USD9.8bn in Sep due to a combination of a precipitous fall in exports and steep jump in non-oil imports. While the decline in exports seems exaggerated, the overall trend of moderation in exports data reflects the impact of discontinuation of DEPB benefit and the ongoing economic slowdown in advanced countries. However, substantial depreciation in INR (~9% till Oct on REER basis) can provide some support to the export growth  going ahead. Given the outlook of frail growth in both external and domestic economies, we expect moderation in both exports and imports. In brief, it means that the trade deficit is expected to remain much higher than the trend level although it might ease from the present, abnormally high levels.