India's Trade Deficit Shrinks to 2013 Low as Export Drop Slowsby
Exports fall 5.7% in February, least since December 2014
Gold imports plunge, purchases of capital goods surge
India’s trade deficit shrank to the smallest since September 2013 as the drop in exports slowed and gold imports plunged.
The shortfall was $6.5 billion in February compared with $7.6 billion the previous month, the Commerce Ministry said in a statement on Tuesday. Exports fell 5.7 percent compared with an average 17 percent drop in the past year and imports eased 5 percent versus an average 15 percent decline.
"I would wait for the end of the fiscal to see if the export recovery has actually happened," said Tirthankar Patnaik, chief strategist at Mizuho Bank Ltd., referring to the year through March 31. "At the moment it is too early to say."
Digging deeper into the import data, however, presents some hope: gold shipments plunged about 30 percent from a year earlier and oil continues to decline, falling 22 percent. Machinery purchases -- seen as crucial inputs for growth -- surged 50 percent.
India’s exports and factory output were seen as weak links in an economy that’s growing at one of the fastest pace in a slowing world. A boost in private investment would ease pressure off Prime Minister Narendra Modi to increase fiscal stimulus, which would worsen Asia’s widest budget deficit.
The trade data follows inflation numbers on Monday, which showed that price pressures in February eased more than economists estimated. It heightened speculation that central bank Governor Raghuram Rajan will lower borrowing costs at or before an April 5 review as Modi stuck to a plan to narrow the budget shortfall.