Sensex

Thursday, July 01, 2010

**[investwise]** India FY11 Trade Deficit May Rise To $ 113 Bn-An Economy Not Quite Healthy?

 

Economy - Foreign Trade - Trade deficit widens to 18-month high
 

India's foreign trade data continues to post strong growth numbers for last seven months through May '10. Stronger growth in imports (particularly oil imports) as compared to exports, however, has resulted in a sharp widening of trade deficit.

n       Strong trade growth continues. Continuing its growth momentum for the seventh consecutive month in May' 10, India 's exports grew by 35.1% and imports grew by 38.5%. Cumulative value of exports for Apr-May '10 stood at US$ 33 billion as against US$24.4 billion during Apr-May '09 - registering a growth of 35.7% (yoy).  

n       Oil imports at 20 months high. Oil import increased to US$8.8 billion in May '10 - the highest level in last 20 months - registering 66.7% growth over same period last year. This is despite a 10% (mom) decline in international crude oil prices in May '10.

n       Non-oil imports softening. On mom basis, non-oil imports have witnessed a decline for the third consecutive month in May '10. Non-oil imports increased to US$ 18.6 billion in May '10, down from US$19.2 billion in Apr '10. Comparing for the same period last year, non oil imports, however, were 32.3% higher in May '10.   

n       Trade deficit widens further. Trade deficit in May '10 stood at US$11.3 billion - the highest in any single month in one and a half years. Trade deficit for the first two months of FY11 widened to US$21.7 billion, which is US$7.2 billion higher than the deficit during the same period last year.

n       Base-effect keeping trade growth high. A large part of the explosive growth in India 's foreign trade since Dec '09 is on account of the abysmally low levels of the corresponding months last year. These trends are likely to continue till Oct '10.

n       Foreign trade outlook. As has been mentioned earlier, we don't expect a major direct impact of on-going debt crisis in Europe on India 's international tradeas the PIIGS ( Portugal , Ireland , Italy , Greece and Spain ) accounts for only 4.4% of India 's exports and 2.2% of imports. However, as the favourable base wanes after Oct '10, trade growth numbers will start looking more realistic. We expect India 's exports to grow by 14% and trade deficit to reach at US$113 billion in FY11.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

__._,_.___
Recent Activity:
*****************************************
http://in.groups.yahoo.com/group/investwise/

INVESTMENTS IN INDIA
We are low-risk, long-term investors. 

Stocks, mutual funds and the entire investment gamut.  Only financing/investment avenues in India will be discussed. 

For any assistance, questions or improvement ideas, contact investwise-owner@yahoogroups.co.in

****************************************************************

NEW! ==== Check our LINKS and FILES sections for a world of information. REGULARLY UPDATED.

NEW! ==== Check "Tracklist" in Links and Files sections for Investment Ideas.

****************************************************************
.

__,_._,___

No comments: