India's merchandise trade deficit widens to $27B in July
What's the story
India's merchandise trade deficit widened significantly to $27.35 billion in July, from $18.78 billion in June, provisional data from the commerce ministry showed on Thursday. The widening gap was due to a decline in exports and an increase in imports during the month under review. Exports fell to $37.24 billion last month, while imports rose sharply by 8.6% year-on-year (YoY) to touch $64.59 billion.
Economic implications
Trade deficit higher than economists' expectations
The widening trade deficit indicates a growing gap between imports and exports, which could have repercussions on employment and the domestic economy. Despite an increase in exports of electronics, pharmaceuticals, and food products, rising commodity prices and steady import demand are contributing to the widening gap. The July trade deficit was higher than economists' expectations of $20.35 billion projected in a Reuters poll.
Information
Trade surplus in June
In June, Indian exporters witnessed major gains with electronics witnessing a surge, pharmaceuticals and engineering goods seeing an uptick, and marine products and meat products posting double-digit growth. Despite these sectoral successes on the global stage, the overall trade balance continues to be a concern.