Trade deficit widens to a new high of $37.84 bn in Nov

India’s merchandise trade deficit printed at an all-time high of $37.8 billion in November 2024 as compared to the average of $23.5 billion during April-October 2024. In November 2023, the trade deficit stood at $21.31 billion and in the previous month of October it was $27.14 billion.

The deficit widened mainly due to a surge in imports to $69.95 billion against $66.34 billion in October and $55.06 billion in November 2023. The country saw an unprecedented surge in gold imports to $14.9 billion in the month, which largely contributed to the higher imports.

“Such high levels of gold imports were likely driven by festive and marriage-related demand and are unlikely to sustain in the ensuing months, which would help to cool the upcoming merchandise trade deficit prints,” said Aditi Nayar, chief economist, ICRA.

As far as exports are concerned, shipments were down 4.83 per cent to $32.11 billion against $33.75 billion in November 2023. November exports were also sequentially lower than $39.2 billion recorded in October.

However, services exports grew 27 per cent to $35.67 billion and services imports grew 29 per cent to $17.68 billion. Overall trade deficit widened to $19.84 billion against $6.89 billion in the year-ago month.

“The adverse trade deficit print for November 2024 will result in a sharper-than-expected widening in India’s current account deficit in Q3 FY2025, to 2.8 per cent of GDP as against earlier expectations of 2 per cent, which will be the highest level in over two years. We have also revised our FY2025 forecast for the CAD to 1.4 per cent of GDP from 1 per cent earlier,” said Nayar.

Meanwhile, during the April-November period cumulative merchandise exports were 2.17 per cent up to $284.31 billion, as compared to $278.26 billion in the same period last year. end