(Bloomberg) -- India’s trade deficit widened unexpectedly in August as a weakness in global demand slowed exports, while imports, particularly of gold, climbed ahead of the festive season.
The gap between exports and imports stood at $29.65 billion in August, Trade Ministry data showed Tuesday. That compares with a $22.8 billion deficit forecast by economists in a Bloomberg survey and a reading of $23.5 billion in July.
Imports grew 3.3% from a year earlier to $64.36 billion in August, while exports fell 9.3% to $34.71 billion during the month. Inbound shipments were $57.48 billion in July, while outbound shipments stood at $33.98 billion.
“Exports is a huge challenge in the current global situation,” Commerce Secretary Sunil Barthwal told reporters in New Delhi.
India is the fastest-growing major economy in the world and is expected to expand more than 7% in the year through March 2025. Demand for consumer products usually picks up ahead of the festive season, which started this month and will last until November.
A rise in gold imports comes after the government slashed the duty on the metal to 6% from 15% in July. Gold imports stood at $10.06 billion in August, compared with $3.13 billion the previous month, while crude oil imports stood at $11.01 billion from $13.8 billion in July, the data showed.
The widening merchandise trade deficit in August was “unexpectedly sharp,” and will put pressure on the current account deficit in the July-September quarter, said Aditi Nayar, chief economist at ICRA Ltd.
Here is more from the briefing:
- India will hold the ninth round of free trade negotiations with the European Union later this month
- During the discussion, India will raise its concerns regarding EU’s norms on sustainability and deforestation among other issues
- India, UK Free Trade Agreement talks to resume from October
--With assistance from Anup Roy.
(Updates with analyst quote in seventh paragraph)
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