August trade deficit to widen : Moody's

Even as the core sector grew 3.1% in July against 0.1% in the previous month, Moody's Analytics, a research wing of Moody's Group, projected the industrial production to remain weak in July and the remaining months of the current financial year.

Eight core industries constitute 38% of the Index of Industrial Production ((IIP). 

 

Meanwhile, the research firm also forecast the trade deficit to rise in August, a worry that may cast its shadow on India's current account deficit. 

 

"(Industrial) Production is expected to remain anemic for the rest of 2013," Moody's Analytics said. 

 

It said India’s industrial sector continues to report poor production figures. "The consumer sector is growing below potential while weak demand, supply bottlenecks, and the uncertainty created by a timid central government are lingering problems for the wider economy," it said.

 

IIP contracted 2.2% in June when core sector rose 0.1%. In the  first quarter of the current financial year IIP fell 1.1% against a decline of 0.2% in the corresponding period of 2012-13. 

 

On the trade front, Moody's Analytics predicted trade deficit to widen in August, following July’s $12.3 billion shortfall. 

 

It said exports unexpectedly surged in July, though the underlying trend is still weak. After two straight months of decline, exports rose 11.6% in July. 

 

Moody's said exports and imports are expected to expand below trend in the coming months. 

 

The government has targeted to raise exports to $325 billion in 2013-14, little over 8% over $300 billion in 2012-13.