Nomura reports all time EXIM high for India in Dec. 2021

India stood at the overall trade deficit of USD 64.4 billion for the October-December quarter – a substantially higher mark as compared to USD 44.1 billion in July-September quarter. But all is not gloomy as EXIM activity hit an all time high in December with an impressive elevation from November. Merchandise exports increased by 38.1% (Y-O-Y) and 12% (over November) and the merchandise exports increased by 37% (Y-O-Y) and 24.1% (over November). These statistics – though keeping the trade deficit at elevated – decreased the gap between exports and imports to USD 21.91 billion in December. “We believe this sets the stage for the current account deficit to widen to 3.4% of GDP in October-December quarter.” said Nomura
For a full financial year, Nomura estimates the trade deficits to hover around 1.6% of GDP, which is a good news since a current account deficit within 2% of GDP is generally seen as sustainable.
If experts are to be believed, the aforesaid numbers of EXIM activity have been a result of high commodity prices and a strong demand, which in turn, kept the trade activity up-heaved. But they also warn against the high deficit percentage and the risks of sticky deficits, which should not be taken lightly.