India’s export growth accelerated to 17.9% y-o-y in October from a 2.3% contraction in September, because of favourable base effects and rupee weakness, explains the research team at Nomura.
Key Quotes
“Surprisingly, import growth spiked to 17.6% y-o-y in October from 10.5% in September, driven by high oil import growth (despite the fall in oil prices) and in the core (non-oil, non-gold) categories.”
“We suspect the spike in oil imports reflects some frontloading because of the expected trigger of the US’s sanctions on Iran in November. The increase in imports led to the trade deficit spiking to USD17.1bn, from a shortfall of USD14bn in September –the fourth time in FY19 (year ending March) that it has breached the USD17bn mark. Our volume analysis shows that export and core import volume growth increased from September levels.”
“We believe the current account deficit in Q3 will breach 3% of GDP; improve in H2 FY19 (year ending March), averaging 2.6% of GDP for the whole fiscal year versus 1.9% in FY18.”
“We continue to believe that the weak rupee, slowing growth and low oil prices will keep the current account in control.”
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