Trade deficit dip due to contraction in non-oil imports: Nomura

MUMBAI: Moderation in June trade deficit is due to weak domestic demand and a steep 6.7 per cent decline in non-oil imports as well as lower oil and gold imports, the two biggest forex outflow heads, Japanese brokerage Nomura said today.

Noting that excluding oil and gold imports, the overall import bill was flat during the month, a Nomura report said, "overall, the lower trade deficit points to the weak domestic demand and the narrow trade deficit in June is largely attributable to lower gold imports.

"Excluding oil and gold, imports remained flat at around USD 21.1 billion against USD 21.9 billion in May, suggesting that weak domestic demand is already reflected in the trade data," Nomura India chief economist Sonal Varma said.

Earlier in the day, the government released trade data for June showing a dip in trade deficit to USD 12.2 billion against USD 20.1 billion in May, which was a 7-month high.

For the second month in row, exports declined 4.6 per cent in June to USD 23.79 billion, while imports too declined marginally by 0.37 per cent to USD 36 billion during the month against a 1.1% contraction in May.

The main reason for decline in imports and trade deficit was dip in gold and silver imports, the Director General of Foreign Trade (DGFT) Anup Pujari told reporters in New Delhi. Gold and silver imports came down to USD 2.45 billion from USD 8.4 billion in May.

Cumulatively, exports during April-May too dipped by 1.41 per cent to USD 72.45 billion. However, imports during the period were up by 5.99 per cent to USD 122.6 billion.

Oil imports grew 13.74 per cent to USD 12.76 billion, from USD 11.22 billion in the same period last year.

On the other hand, non-oil imports declined by 6.7 per cent to USD 23.2 billion.