Trade deficit for September improves, at a 30-month low - Angel Broking

Provisional data released by the commerce ministry indicates that the trade deficit for September 2013 narrowed to USD6.7bn, a 30-month low as compared to USD10.9bn in August 2013 and USD17bn in September 2012. The decline in the deficit can be attributed to both robust export growth as well as decline in imports led by gold imports. Positively, for 2QFY2014, the trade deficit based on commerce ministry estimates amounts to USD30bn much lower than USD50bn in 1QFY2014. The cumulative trade deficit for April - September of 2013-14 is estimated at USD80.1bn, as compared to the deficit of USD91.8bn during April - September of 2012-13.

During September 2013, exports continued their double-digit growth performance for the third straight month. Export growth stood at 11.2% as compared to13% in August 2013 and a 7.2% contraction during September 2012. On a cumulative basis during April - September 2013, exports witnessed growth of 5.1%. We maintain that the outlook for export growth during FY2014 has improved considerably supported by the economic recovery in advanced economies like U.S, Japan and Eurozone along with INR depreciation and low base.

During September 2013, imports reported a steep 18.1% contraction as compared to decline of 0.7% in August 2013 and 5.0% in September 2012. The contraction can be attributed mainly to the sharp 24.2% decline in non-oil imports led by gold imports. Oil imports reported 5.9% contraction during September 2013 as against growth of 17.9% in the previous month. Gold imports are pegged to have come in at about USD0.6bn as compared USD0.7bn in August 2013 owing to curbs on imports. The new gold import policy imposed by the RBI since July 22, 2013 has linked gold imports to exports to restrict domestic consumption. It is quite likely that with the subsequent clarification issued by the RBI in late September, gold imports for the month of October 2013 would be boosted aided by pent-up demand and the festival season. Nonetheless gold imports are expected to moderate to USD40-45bn during FY2014, lower than import of USD53bn for FY2013.

Source : Equity Bulls

Keywords