1. Trade deficit widens, CAD worries

Trade deficit widens, CAD worries

An over six-fold jump in gold imports resulted in overall imports recording a 27% year-on-year jump in November, in turn...

By: | Updated: December 16, 2014 10:36 AM

An over six-fold jump in gold imports resulted in overall imports recording a 27% year-on-year jump in November, in turn widening the country’s trade deficit to an 18-month high of $16.86 billion in the month, sparking fresh worries over the current account deficit (CAD).

In the second quarter ended September 30, the CAD stood at a five-quarter high of  $10.1 billion or 2.1% of gross domestic product owing mainly to an increase in merchandise imports propelled by rising demand for the yellow metal, while export growth remained slow.

Gold imports in November were $5.61 billion as against $836 million in the same month last year. While oil imports fell by 9.7% to $11.71 billion in the month, thanks to a fall in global crude oil prices, non-oil imports, including capital goods, recorded 49.6% growth to $31.10 billion.

This resulted in total imports in the month registering 26.79% growth to $42.82 billion.

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The imported goods sectors that registered high year-on-year growth included those from segments such as fertilisers (136% growth to $1.1 billion), gold (571%), silver (144% to $644 million), coal (44% to $1.8 billion), chemicals (16% to $1.6 billion), pearls and precious stones (37% to $2.1 billion) and iron and steel (62% to $1.4 billion).

Machinery, electrical and non-electrical imports rose 20.3% to $2.5 billion, while transport equipment imports grew 23% to $2 billion.

Electronic goods also registered 29.5% jump to $3 billion.

Meanwhile, exports grew by 7.27% to $25.96 billion after shrinking by a little over 5% in October. The sectors that have fared well include engineering goods (30% growth to $6.6 billion), gems and jewellery (44% to $3.7 billion), chemicals (16% to $1.1 billion) and drugs and pharma (9% to 1.2 billion).

Owing to weak demand overseas, several sectors registered low or negative growth, including electronic goods, petroleum products and farm products. Petro products exports shrunk by 14% to $4.1 billion.

During the fiscal so far, imports grew 4.65% to $316.37 billion, while exports were up 5.02% to $215.75 billion. The trade deficit during April-November this fiscal was $100.61 billion as against $96.89 billion in the corresponding period last fiscal.

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