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Trade Deficit Widens
Jan 18, 2018

India's December trade deficit widened to its highest in more than three years as higher import bills for gold and crude oil weighed on rising exports.

In December, exports increased by 12.3% to US$27 billion, while imports increased by 21.1% to US$41.9 billion, while imports of gold, precious stones and crude oil surged during the last month. As per the data released by the commerce ministry, the trade deficit or the difference between imports and exports was US$14.88 billion, up about 41% YoY. The gap had touched US$16.2 billion in November 2014.

Imports during the first nine months of the current fiscal amounted to US$338.3 billion as against US$277.8 billion, a growth of 21.7%. The trade deficit during the period widened to US$114.8 billion.

Because of this, the Indian rupee on Tuesday weakened 0.9%, its steepest fall in eight months, against the US dollar. Also, worries of rising inflation and speculation that the government may miss its deficit target, after international crude oil prices reached US$70 a barrel, will give less space to the RBI to cut rates in the near term.

A wider current account deficit in the midst of a sharp rise in oil prices, fiscal slippage risks, and above-target inflation point to a weaker macro backdrop for the economy.

Data Source: CMIE

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