India’s trade deficit widens to US$18b

NEW DELHI: India’s trade deficit last month widened to the most in more than five years, worsening the outlook for the rupee that hit a record low on Tuesday.

The gap between exports and imports reached US$18 billion (RM73.8 billion) last month, fanned by a higher oil import bill, according to data released by the Commerce Ministry on Tuesday. That compared with the US$15.7 billion median estimate in a Bloomberg survey of 24 economists and US$16.6 billion in June.

The trade shortfall puts pressure on the current account deficit, a key vulnerability for the economy and one of the reasons why the rupee has been among the worst-hit in Asia amid an emerging market rout this year.

The rupee dropped to as low as 70.08 per US dollar on Tuesday as a collapse in Turkey’s lira hit investor sentiment, taking the slump in India’s currency down to 8.6 per cent this year.

Inbound shipments of oil in July were at US$12.4 billion, up 57.4 per cent from a year ago, while gold imports surged 41 per cent to US$2.96 billion and electronics goods by 26 per cent to US$5.12 billion. Overall imports rose 29 per cent to US$43.8 billion, while exports grew at 14 per cent to US$25.8 billion.

The last time the trade deficit was wider was in May 2013 at US$19.1 billion, according to data compiled by Bloomberg.

The wider trade gap comes at a time when inflation is easing, complicating the central bank’s policy outlook. Wholesale price inflation eased for the first time in five months, while consumerprice growth moderated to 4.17 per cent last month.