Trade deficit widens to $14.62 billion

Trade deficit widens to $14.62 billion

News:

1. India’s trade merchandise trade deficit widened

Important facts:

2. Trade deficit widened to $14.62 billion in May 2018.
3. The shortfall was $13.72 billion in April 2018 and $13.84 billion in May 2017.
4. Reasons:

• 50% increase in global Brent price
• Exports in May grow faster on the back of engineering goods, petro products, chemicals and pharma.

Export related figures:

• Exports during 2018 were valued at $28.86 billion as compared to $ 24.1 billion in May 2017.
• Merchandise exports in April had grown by only 5.17% while imports grew 4.6%.
• Exports grew 8.32% in May 2017, while imports grew 33.1%.
• Cumulative value of exports for the period April-May 2018-19 was $54.77 billion .

Imports:

• Imports during May 2018 were valued at $43.48 billion which was 14.85% higher in dollar terms.

5.Major export groups that witnessed strong growth include:

• Engineering goods (14.8%)
• Petroleum products(104.5%
• Organic and inorganic chemicas(34.2%)
• Drugs and pharmacuticles (25.7%)
• Cotton yarn/fabrics/made-ups and handloom products(24.7%).
• Oil imports during May 2018 were valued at $11.5 billion which was 49.5% higher in dollar terms and 56.7% higher in rupee terms compared to $7.69 billion in May 2017.

6.Challenges:

• To sustain the growth momentum
• The U.S.-China trade war must be watched.
• Rising raw material costs will be a challenge

7. Conclusion:

With the U.S. confirming 25% tariffs on $50 billion Chinese imports and the Chinese stating they would retaliate, it is time for India to keep engaged with both the U.S. and China to safeguard our own interest.