► April foreign trade deficit print is a mere $3 billion. Prima facie, this looks good.
► In April 2018, the same deficit was $6.7 billion. The economic nosedive is reflected onto the trade balance. In March 2019, the yearly balance was $41.2 billion. In April, it is $37.4 billion.
► Non-energy non-gold core surplus is a yearly $7.1 billion, a record high since 1996.
► However, it mainly comes from shrinking imports. Exports rose by 4.6 percent annually whereas imports dropped down by 15.1 percent.
► That exports aren’t conducive from a genuine export-driven rebalancing – at least not yet - can be seen from terms of trade.
► This is despite the fact that the real effective exchange rate has been falling. It isn’t the exchange rate per se that drives exports although it enters trade regressions with a positive sign because only 3.2 percent of exports are high-tech.
► This is a temporary phenomenon. Still, this is what makes industrial production remain tame compared to private consumption demand.
► Now that there are meager indicators of business cycle recovery, there may be kind of a partial return to normalcy in H2. Especially Q4.