{LONGTERMINVESTORS} Fwd: India: Trade data continues to disappoint

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From: <research@icicibank.com>
Date: Mon, Jan 18, 2016 at 7:37 PM
Subject: India: Trade data continues to disappoint
To: stockdesai@gmail.com

Trade deficit widened to USD 11.7 bn in December as against the November deficit of USD 9.8 bn. Exports contracted for the thirteenth consecutive month while imports improved on higher non crude imports India's external sector outlook is still favorable despite the muted merchandise EXIM performance. The EXIM data is broadly tracking our CAD expectation of USD 22 bn in FY2016 (1.0% of the GDP). Exports continued to disappoint Exports contractesd for the thirteenth consecutive month, worse than the steep decline witnessed during the credit crisis of 2008-09. Exports contracted by 14.7% in December, lower than 24.5% decline witnessed during the previous month.  Petroleum products, gems and jewellery and engineering goods posted declines during the month. The key segments that witnessed growth during the month were drugs and pharma, organic and inorganic chemicals and textiles.  Given the recent trend, exports are likely to fall below USD 300 bn mark, for the first time since FY2011. The overall weak export growth is indicative of weak global demand as well as sharp correction in commodity prices. Imports improved on higher gold imports Imports contracted by 3.7% YoY in December as against contraction of 30.2% YoY in November. Gold imports remained strong at USD 3.8 bn in December as against USD 3.5 bn in November. Meanwhile, crude imports remained weak at USD 6.6 bn in December, clearly reflecting the steep decline in crude prices. There is scope for crude imports to fall in January as well. However, non gold non crude imports, a broad gauge of domestic demand and industrial recovery, fell by 1.9% YoY in December as against ~22% YoY in November.  The contraction was driven by: coal (-35%), mineral ores (-22%), fertilizers (-20%), and chemicals (-5%). Trade deficit widened to USD 11.7 bn in December Source: Bloomberg, ICICI Bank Research Trade deficit widened in December India's trade deficit widened to USD 11.7 bn in December as against a deficit of USD 9.8 bn in November. On a cumulative basis, trade deficit for April-December FY2016 was USD 99.2 bn, lower than the deficit of USD 111.7 bn during the same period previous year. India's external sector outlook is still favorable despite the muted merchandise EXIM performance. The EXIM data is broadly tracking our CAD expectation of USD 22 bn in FY2016 (1.0% of the GDP). Regards, ICICI Bank Contact: Samir Tripathi (+91-22) 4008-1414 (ext:7233) samir.tripathi@icicibank.com

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CA. Rajesh Desai

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