A record monthly trade deficit in January is not a aberration and is likely to widen further in coming months due to slowing exports, analysts said.
Monthly trade deficit widened to $9.4 billion from $5.4 billion in December, or nearly 10 percent of GDP annualised, according to Morgan Stanley. While exports grew 20 percent, imports rose 63.6 percent on-year, surpassing the average of 27.5 percent in the first three quarters of 2007/08, Goldman Sachs said.
The still-strong domestic demand and high global crude oil prices will continue to keep the pace of imports ahead of exports, JP Morgan said in a note.
Expects current account deficit to widen to $23.7 billion in 2008/09 from $17.4 billion in 2007/08. Outsized gains in import figures in January is likely to be temporary and healthy invisible account surplus in the form of worker remittances and software exports is likely to more than offset the widening trade gap, JP Morgan said.
Goldman Sachs expects exports to continue to slow and the trade deficit to widen in 2008/09. Exports have taken a hit this year due to slowing external demand, rupee appreciation and high domestic interest rates, it said.