Record $23.27 billion in trade deficit to push current account (CAD) deficit to 1.9% in 2021-22

In November, the trade deficit more than doubled to USD 23.27 billion

After a record trade deficit of $23.27 billion in November, an offshore brokerage firm raised its current account (CAD) deficit forecast to 1.9% of GDP at $60 billion for the period. period 2021-22 compared to the previous $45 billion.

The government released trade data on Wednesday, showing that exports rose 26.5% year-on-year to $29.88 billion last month, while imports rose 57.2% to 53. 15 billion USD, causing a trade deficit of 23.27 billion USD.

The trade deficit – the difference between a country’s imports and exports – has widened and remains sticky, fueled by weaker exports, increased domestic activity and higher commodity prices, a report said. Barclays report said.

While the recent correction in crude oil prices may slightly support the deficit trend, the sustained commodity shortfall on an average basis is around $16-17 billion per month for the country, could keep the CAD close to a sustainable range of 2%.

But at the current pace, CAD on a yearly basis is running closer to 3%. Explaining some of the cuts going forward, we raise our CAD forecast to $60 billion (from $45 billion previously), or 1.9% of GDP for this fiscal year, the report said. .

Exports from April to November 2021 reached US$262.46 billion, up 50.71% over the same period in 2020. On the other hand, imports increased by 75.39% to US$384.44 billion, bringing the trade deficit up. trade to 121.98 billion USD in 8 months. period of this financial year.

In November, the trade deficit more than doubled to $23.27 billion as gold imports increased by about 8% to $4.22 billion and other imports such as crude oil increased by 132.44% to 14. $68 billion.

The record-high trade deficit in November was largely due to weaker exports, but also partly due to continued strength in imports for three consecutive months, Barclays said, noting that Physical exports revised down to $29.88 billion last month.

The report attributed the higher import bill of $53.2 billion to higher commodity prices and a recovering domestic demand.