Making Sense

India's Trade deficit narrowed sharply to $ 15.60 bn while the services surplus narrowed to $ 12.70 bn from $ 16.70 in the previous month. POL Deficit as a % of Trade deficit was sharply higher at 76% as POL exports were sharply down to $ 5.40 bn from an average of $ 7.10 bn over the previous 11 months. The sharp deficit in gems and jewelry imports recorded in February eased to $ 2.20 bn in the month of March.  For the year as a whole, Merchandize trade recorded a deficit of $ 238 bn and Services Trade recorded a surplus of $ 167 bn , thus on trade combined India recorded a deficit of $ 78 bn from previous year's $ 122 bn.  On the transfers and income, India has so far recorded a surplus of $ 41 bn and in the last quarter assuming a number of $ 14 bn, the transfers and income surplus will likely aggregate $ 55 bn , thus leaving a Current Account Deficit for the year as a whole to $ 23 bn.  In my February Post on release of the Trade data , I had estimated Current Account ...

India recorded a trade merchandize deficit of $ 18.70 bn and a services surplus of $ 16.76 bn, thus registering a combined deficit of $ 1.95 bn. Extrapolating averages, I see Current Account Deficit at $ 24 bn for FY23-24 and an even lower number if I adjust the actuals with the trend for the months of Jan and Feb, at ~ $ 20 bn which I think is a more probable outcome.

India's overall Trade Deficit was a positive surprise with data summarized below: Sharply higher services exports at $ 32.80 bn (18% higher mom) and lower merchandize imports (down 7% lower mom) saw trade deficit narrow to $ 740 mn.  If we can maintain the higher services exports and lower merchandize imports, we could end the year with an even lower current account deficit.  For the week ended 09 Feb 2024, FX reserves declined by $ 5.20 bn to $ 617 bn. 

  "The only limit to our realization of tomorrow will be our doubts of today." Yesterday, US released the Advance Retail Sales data. Adv Retail Sales and Food Services Data fell 0.40% mom against consensus estimates of a 0.30% contraction and following a revised 3.20% in the month of January 2023. Compared to Dec 22, Retail Sales are up 2.81%. The data offers limited insight. US also released the PPI data which fell 0.10% mom against consensus estimates of a rise of 0.30% following a downward revision to the Jan number to 0.30% rise from earlier reported 0.70% rise. This is seen as a welcome moderation in the data. Overnight we saw the market deeply concerned about the contagion risk moving to European Banks. European Banking index was down 8.40% with concerns centred around Credit Suisse. Later, during the day, FINMA and SNB issued a statement expressing comfort on the Credit Suisse capital and liquidity metrics. SNB offered a $ 54 bn covered loan facility to the bank. At th...

“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 + tr...