India’s trade deficit expanded to a record high in November, as the nation’s import bill ballooned, particularly due to a rise in gold shipments.
The gap between exports and imports stood at $37.8 billion in November, trade ministry data showed Monday, much higher than the $23 billion deficit forecast by economists in a Bloomberg survey. Trade deficit in October stood at $27.1 billion.
A widening trade deficit may put further pressure on India’s current account deficit and the local currency, which weakened 0.5% against the dollar last month, marking its worst month since March.
Imports rose 27% in November from a year earlier to $69.95 billion, while exports stood at $32.11 billion, down 4.9%. Inbound shipments were $66.3 billion in October, while outbound shipments stood at $39.2 billion.
Gold imports shot up to a record high of $14.8 billion in November as demand for the yellow metal increased after the government slashed the custom duty to 6% from 15% in July. Demand for gold also rose as rising geopolitical tensions made the asset class more attractive to investors.
What Bloomberg Economics Says
India’s record trade deficit in November will weaken the rupee further. Imports surged during the month and exports declined. While further details are pending, we believe the Reserve Bank of India’s FX sales will need to continue for now to prevent a sharp fall in the currency.
Abhishek Gupta, India economist
While India reported its slowest growth in almost two years in the July-September quarter, there’s some rebound in high-frequency indicators in the last few months. However, rising conflict in the Middle East and Donald Trump’s proposed tariffs may complicate the growth outlook in 2025.
The World Trade Organization last week said the outlook for global trade “is clouded by rising economic uncertainty, including possible shifts in trade policy.”
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