Merchandise trade deficit in Q4 FY24 is expected to moderate, providing respite to the current account deficit, according to India Ratings and Research (Ind-Ra)
The merchandise imports are expected to touch a six-quarter high of around $180 billion in 4QFY24. (File Image: DC)
Chennai: Merchandise trade deficit in the March quarter is expected to moderate to $64 billion and give some respite to current account deficit.
India Ra expects the merchandise exports to increase to around $117 billion in 4QFY24, up 2 per cent yoy. This would be a seven-quarter high. Merchandise exports grew 1.1 per cent yoy to $105.7 billion in 3QFY24 due to a favourable base effect and a pickup in demand from the US, the UAE and the Netherlands. However, on a sequential basis, it was lower than $107.4 billion in 2QFY24.
Likewise, the merchandise imports are expected to touch a six-quarter high of around $180 billion in 4QFY24, up 8 per cent yoy. The merchandise imports had increased to a year’s high of $176.2 billion in 3QFY24. The imports of intermediate and consumer durable goods were at a record high and a five-quarter high respectively in 3QFY24.
Overall, the goods trade deficit might moderate to $64 billion in 4QFY24.
On the services front, demand has remained healthy despite global headwinds. The trend continues to be strong with the latest high frequency indicators. The global services PMI touched a seven-month high of 52.4 in February 2024 with the push emanating from both the developed as well as emerging markets. The services trade surplus may sustain the record-breaking run and stand at a fresh high of $47 billion in 4QFY24.
The current account balance (CAB) is supposed to have been in a deficit of around $11 billion in 3QFY24 against $16.8 billion in 3QFY23.
“Ind-Ra expects the current account deficit to dip in 4QFY24. Although the global economic environment remains uncertain, there are nascent signs of a pick-up in economic activity. The global manufacturing Purchasing Managers’ Index (PMI) expanded for the first time in 17 months in February 2024. The expansion was stronger in the US and emerging economies (barring the European region)”, said Sunil Kumar Sinha, Principal Economist, Ind-Ra.
India Ra expects the merchandise exports to increase to around $117 billion in 4QFY24, up 2 per cent yoy. This would be a seven-quarter high. Merchandise exports grew 1.1 per cent yoy to $105.7 billion in 3QFY24 due to a favourable base effect and a pickup in demand from the US, the UAE and the Netherlands. However, on a sequential basis, it was lower than $107.4 billion in 2QFY24.
Likewise, the merchandise imports are expected to touch a six-quarter high of around $180 billion in 4QFY24, up 8 per cent yoy. The merchandise imports had increased to a year’s high of $176.2 billion in 3QFY24. The imports of intermediate and consumer durable goods were at a record high and a five-quarter high respectively in 3QFY24.
Overall, the goods trade deficit might moderate to $64 billion in 4QFY24.
On the services front, demand has remained healthy despite global headwinds. The trend continues to be strong with the latest high frequency indicators. The global services PMI touched a seven-month high of 52.4 in February 2024 with the push emanating from both the developed as well as emerging markets. The services trade surplus may sustain the record-breaking run and stand at a fresh high of $47 billion in 4QFY24.
The current account balance (CAB) is supposed to have been in a deficit of around $11 billion in 3QFY24 against $16.8 billion in 3QFY23.
“Ind-Ra expects the current account deficit to dip in 4QFY24. Although the global economic environment remains uncertain, there are nascent signs of a pick-up in economic activity. The global manufacturing Purchasing Managers’ Index (PMI) expanded for the first time in 17 months in February 2024. The expansion was stronger in the US and emerging economies (barring the European region)”, said Sunil Kumar Sinha, Principal Economist, Ind-Ra.
( Source : Deccan Chronicle )
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