India release of trade deficit

“Time is your friend; impulse is your enemy.” - John Bogle

India released the trade deficit data. 

December merchandise trade deficit came in at $ 23.76 bn (prev month $ 23.89 bn) with mom exports growing at 8% , current $ 34.48 bn, prev month $ 31.99 bn and mom inports growing 4% , current month $ 58.24 bn , prev month $ 55.88 bn.

On the services side, exports rose 4% mom to $ 27.34 bn while imports rose 16% mom to $ 15.56 bn. Dec services exports and imports held steady above the Apr - Dec 2022 mean of $ 26 bn and $ 15 bn. 

On the aggregate, trade deficit ( merchandise + services ) stands at $ 118 bn which is a significant deterioration from the deficit of $ 57.26 bn for the corresponding period in 2021.

The transfers and income surplus for H1 22 - 23 stood at $ 26 bn, extrapolating the same, transfer and income surplus is estimated at $ 13 bn. Q3 merchandise trade deficit is est at $ 74.5 bn while services surplus is est at $ 36.85 bn. Invisibles (services + income + transfer) is estimated at $ 50 bn thus the current account deficit for Q3 is likely to clock $ 25 bn and FY 22 - 23 upto Q3 CAD is likely at $ 80 bn. 

CAD likely peaked in Q2 and the current numbers show moderation. Analysts estimates for CAD had ranged between $ 135 - $ 150 bn during the middle of FY. It appears for now that we may end the year at $ 105 bn in CAD.