ICRA said the monthly trade deficit is likely to narrow due to fall in commodity prices, but it is likely to remain higher than the year-ago level.
Rating agency ICRA said in a report that India's merchandise exports are likely to decline by up to 7% year-on-year in December-March fiscal 2023 due to a slowdown in major export destinations and lower commodity prices.
This comes after official data pegged merchandise exports in November 2022 at $31.99 billion, slightly higher than $31.80 billion in November last year. The trade deficit narrowed to $23.89 billion in November as compared to $26.91 billion in October.
“Going forward, we expect merchandise exports to contract by ~7% YoY in December-March FY2023, driven by a slowdown in major export destinations and lower commodity prices, even pre-Christmas shipments Help is likely. month," the report said.
While the pace of YoY growth in merchandise imports is likely to decelerate to 4% from 29.5% seen in April-November FY2023, this will be on the back of a higher base amid softer commodity inflation. "Overall, we anticipate an increase in merchandise exports (+3%) compared to imports (+18%) in FY2023," ICRA said.
With a sequential increase in exports of 7.4% and a decline of 1.4% in imports, the merchandise trade deficit narrowed to $23.9 billion in November 2022, from $21.2 billion in November 2021, from $26.9 billion in October 2022.
The report further said, "Lower commodity prices are likely to widen the print of the monthly trade deficit going forward, but these are expected to remain elevated relative to year-ago levels, with domestic demand picking up on a positive note." Chances are."
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