Trade deficit widened sharply in July to ~USD15.5bn compared to an unusual low of ~USD10bn in June, largely due to a sharp fall in exports and rise in non-oil imports. Still, the trade deficit during Apr-Jul 2012 stood lower at ~USD55bn compared to USD61bn in the same period last year. Slowing exports reflect a challenging external environment, and forward looking exports orders index (in the PMI data) suggests that this would continue. Imports which jumped up in July might not sustain the pace given the faltering domestic demand and slowing gold imports although a rebound in prices will keep oil imports sticky. On balance, trade deficit would remain wide in coming months (although lower than last year).
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