Led by gold imports, May trade deficit jumps to 30-month high

Spike in gold imports swells trade gap to $13.84 bn; exports up by 8% at $24 bn

Exports for the month of May went up 8.3 per cent year-on-year (YoY), a ninth straight month of growth. However, the rate of rise was still lower than April, when exports grew 19.4 per cent. 

The combined trade deficit for April and May, first two months of 2017-18, jumped a staggering 143 per cent YoY, showed data issued by the commerce ministry on Thursday. Trade deficit for May has been the highest for the last 30 months.

Imports for May grew 33 per cent; for April-May combined, they grew 40 per cent. Total imports rose mainly on the back of petroleum products, gold and electronic goods, pearls, precious and semi-precious stones, and machinery. Gold imports for May grew 237 per cent.

Outbound trade was $24 billion, compared with $22.2 billion for the same period last year. Imports were $37.9 billion for May, compared with $28.4 billion in May last year. The trade deficit for May was $13.8 billion, compared with $6.3 billion for the same period last year. The April-May deficit was $27.1 billion, compared with $11.1 billion in April-May 2016.

“While the growth of merchandise exports is in line with our expectations, the continuing surge in imports has led to the trade deficit for May being considerably wider than anticipated,” said Aditi Nayar, principal economist with ratings agency Icra.

She said the continued growth in import of pulses, despite a record harvest and decline in price, was somewhat surprising. “Icra expects the current account deficit to widen to $27-32 billion (1.1 per cent of gross domestic product, or GDP) in FY18, from $15 billion in FY17 (0.7 per cent of GDP),” she said.