Trade gap widens to 30-month high in May

NEW DELHI: Slower growth in exports and sharper rise in imports led by gold and silver made India’s trade deficit balloon to a 30-month high in May.

Imports grew 33% from a year ago to $37.8 billion, buoyed by a 236% rise in gold imports at $4.9 billion.

Exports increased the slowest in eight months at 8.3% to $24 billion, widening the trade deficit to $13.84 billion from $6.2 billion in the year ago period.

“Half of the upsurge in merchandise imports was led by precious metals and stones, which is likely to be on account of restocking after the festive and marriage season, and prior to Goods and Services Tax (GST),” said Aditi Nayar, principal economist at ICRA.

Gold, silver and precious and semi-precious stones recorded a growth of 128% in May.

“The continued growth in imports of pulses despite the record harvest and decline in prices is somewhat surprising,” Nayar said.

The growth in merchandise exports in May was led by petroleum products, engineering goods, gems & jewelery and food items such as marine products and rice.

Oil imports in May saw a 29.5% spike to $7.7 billion while non-oil imports were up 34.03% at $30.1 billion.

This was the ninth consecutive month of rise in exports. Twenty-one out of 30 sectors showed an increase in exports.

India’s export numbers have come when Chinese overseas shipments rebounded in April and rose 8.7% from a year ago while imports were up 14.8%.