India Economy - Quiet Start For Goods Trade In FY25: ICICI Securities

ICICI Securities Report

Merchandise exports grew just 1.1% YoY in April 2024, outpaced by 10.2% YoY growth in imports, and a wider merchandise trade deficit of $19.1 billion. A spurt in oil imports (+20.2% YoY, much more than the 6.1% YoY rise in Brent crude price) was a crucial contributor – correcting for slower oil imports in Jan-March 2024 than the rise in Brent price during those months.

The April 2024 spurt in crude oil and edible oil imports is likely to be temporary (precautionary purchases countering price risks amid the fleeting Iran-Israel flare-up).

The services surplus widened 9.2% YoY in Jan-Mar-24. While this was slower than the 16% YoY widening of the services surplus in Apr-Dec-23, it will suffice to ensure a comfortable current account surplus of USD 8bn for Q4 FY24.

Electronics and chemical exports remain robust, but leading indicators suggest a broad-based acceleration that should include engineering goods and refinery products. If the government notifies the labour reforms soon after the elections, a medium-term surge in labour-intensive exports is likely.

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