Surge in Gold Imports Widened Trade Deficit to All-time High at US$37.84bn
Moneylife Digital Team 19 December 2024
India's merchandise trade deficit in November widened to an all-time high, led by a surge in gold imports, while exports fell, driven by a drop in crude oil prices. In November, the trade deficit printed at an all-time high of US$37.8bn (billion) compared to the average of US$23.5bn during April-October 2024, amidst a surge in gold imports to an unprecedented US$14.9bn during the month, as well as a relatively milder uptick in other imports.
 
In November, India's merchandise exports stood at US$32.11bn, while imports were US$69.95bn.
 
 
In a release, the Union ministry of commerce & industry says India's total exports (merchandise and services combined) for November 2024 are estimated at US$67.79bn, registering a growth of 9.59% compared to November 2023. Total imports, including merchandise and services, for November 2024 are estimated at US$87.63bn, registering a growth of 27.47% compared with November 2023.
 
 
India's total exports during April-November 2024 are estimated at US$536.25bn, registering a growth of 7.61%, while total imports during the same period are estimated at US$619.20bn, registering a growth of 9.55%, the ministry says.
 
From April to November 2024, non-petroleum, non-gems and jewellery, including gold, silver and precious metals, imports were US$299.13bn compared to USS283.77bn in the same period in 2023.
 
Aditi Nayar, chief economist & head for research outreach at ICRA Ltd, says, "Such high levels of gold imports were likely driven by festive and marriage-related demand and are unlikely to sustain in the ensuing months, which would help to cool the upcoming merchandise trade deficit prints."
 
"Nevertheless, the adverse trade deficit print for November 2024 will result in a sharper-than-expected widening in India's current account deficit in Q3 FY2025, to about 2.8% of GDP as against earlier expectations of around 2.0%, which will be the highest level in over two years. We have also revised our FY24-25 forecast for the CAD to about 1.4% of GDP from around 1.0% earlier," she added.
 
According to the ministry data, the top-5 import sources, in terms of change in value, exhibiting growth in November 2024 vis-à-vis November 2023 are Switzerland (360.02%), United Arab Emirates (UAE) (109.57%), South Africa (217.33%), Australia (71.91%) and Saudi Arabia (35.64%). The top-5 export destinations, in terms of change in value, exhibiting positive growth in November this year compared to November 2023 are UAE (11.38%), Australia (64.38%), Italy (37.71%), Singapore (22.88%) and Malaysia (27.31%).
 
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