Imports rise in August, widening trade deficit

Chennai: Amidst slowing exports, imports in August rose to widen the merchandise trade deficit to $29.65 billion. However, exports showed a slight uptick sequentially and the April-August exports were still higher than last year.

Merchandise exports declined to $34.71 billion in August from $38.28 billion a year ago, while imports were at a record high of $64.36 billion, up from $62.30 billion in August 2023. Merchandise exports contracted 9.3 per cent in August due to muted global demand and geopolitical challenges, the commerce department said.

A huge slowdown in China, falling petroleum prices, recession in Europe, and transportation and logistics-related challenges affected merchandise exports, the government said. Petroleum exports and gems and jewellery exports were mainly responsible for the decline in merchandise exports. However, merchandise exports in August were slightly up when compared to $33.98 billion in July.

The cumulative merchandise exports during April-August 2024 stood at $178.68 billion compared to $176.67 billion in the same period last year.

On the other hand, merchandise imports in August rose 3.3 per cent annually to $64.4 billion during the month, widening the trade deficit. India's trade deficit widened to $29.65 billion in August from $24.2 billion in the same month last year, $23.5 billion in July and $20.98 billion in June. The trade deficit hit a 10-month high in August.

“With the unexpectedly sharp widening in the merchandise trade deficit in August 2024, we are apprehensive that the current account deficit will rise to 1.5-2 per cent of GDP in this quarter,” said Aditi Nayar, chief economist, ICRA.

Meanwhile, overall exports - merchandise and services combined - in August reported a lesser decline of 2.4 per cent to $65.4 billion, owing to the growth in services exports. Services exports rose to $30.69 billion against $28.71 in the same month last year. Services imports stood at $15.70 billion against $15.09 billion in the same month last year.

Overall imports, both merchandise and services combined, increased 3.45 per cent to $80.06 billion against $77.39 billion in August last year. Cumulative overall exports during April-August 2024 is estimated to be $374.33 billion, as compared to $350.11 billion in April-August 2023.