Higher Oil Import Bill Weighs on India as Trade Gap WidensBy
Oil imports surged 41.5% in value terms as brent crude rallied
Widening trade gap to put pressure on current account deficit
India’s trade deficit widened the most in three months in April as rising crude prices weighed on the world’s third-biggest oil consumer.
The trade deficit -- gap between exports and imports -- was at $13.7 billion in April, data released by India’s commerce ministry showed on Tuesday. That compares with the $15 billion median estimate in a Bloomberg survey of 27 economists.
Key points from April trade data:
Although overall imports rose at the slowest pace in 16 months, a surge in oil prices pushed the trade gap wider. Brent crude averaged $71.76 a barrel in April, according to data compiled by Bloomberg. It extended gains to above $79 a barrel, the highest since 2014, on Tuesday.
Higher prices of oil -- India’s biggest import -- comes amid weakness in the rupee, driving up import costs. That may also push current-account gap wider and make the economy more vulnerable to rising U.S. interest rates.
What a Weak Rupee and Costly Oil Mean for India:
India’s trade deficit will widen to a four-year high of 6.4 percent of the gross domestic product in the year through March, rising from 6 percent last year, due to rise in oil and gold shipments, according to India Ratings and Research, the local unit of Fitch.
— With assistance by Manish Modi