India's trade deficit is beginning to consolidate, but the weaker exports are prompting a more gradual adjustment than expected, Barclays Bank said in a note on Tuesday.
India's trade deficit fell to $26.7 billion in September from $28 billion in August and $30 billion in July.
In that same period, merchandise exports moderated from $36.2 billion in July to $33.9 billion in August, to $32.6 billion in September. The import bill, meanwhile, dropped to $59.3 billion in September from $61.9 billion in August.
|Month||Trade deficit||Merchandise exports|
|July||$30 billion||$36.2 billion|
|August||$28 billion||$33.9 billion|
|September||$26.7 billion||$32.6 billion|
"Exports are moderating despite some stabilisation in petroleum shipments, with the bulk of weakness in non-oil, non-jewellery exports," Rahul Bajoria, India economist at Barclays Bank, said.
India's potentially faster growth path amid a deteriorating global backdrop could bring the risks of a slower pace of decline in the trade deficit and that of a wider current account deficit, Bajoria said.
Corporate credit quality improved in H1 FY23, infra companies most upgradedThe infrastructure sector led corporate upgrades during the period, as per data reported by CARE Ratings, CRISIL and ICRA
Despite the trade deficit moderating since the record high of $30 billion in July, the overall gap remains large, Bajoria noted.
India's current account deficit remains on track to reach $115 billion, or 3.3 per cent of the gross domestic product (GDP), in the current fiscal year, he estimates.
"As a result, while the RBI (Reserve Bank of India) continues its battle to reduce inflation, it will not lose sight of evolving risks to India's macroeconomic stability."