Fall in core imports, capital goods imports raise concerns on trajectory of domestic demand: Report

Weakness in Non-Oil Non-Gold exports, and imports raise concerns about demand environment both domestically, externally, says report

The fall in core imports and capital goods imports raises concerns about the trajectory of the domestic demand environment, JM Financial Institutional Securities said in a report.

Weakness in Non-Oil Non-Gold exports and imports raises concerns about the demand environment both domestically and externally, the report said.

Although India’s bilateral trade relations with Israel and Iran are marginal, escalation of war would add to the risk of a resurgence in inflationary pressures, eventually widening the CAD beyond our expectation of 1.4 percent of the GDP.

Fiscal measures have been proactive in the recent past, the results of which have been evident. Recent export restrictions on parboiled and broken rice keep a tab on inflationary pressures domestically, reflected in the export figures of rice, which is at its lowest since Dec’20 ($586mn, -25 percent YoY).

Similarly, imports of pulses have been the highest ($315mn, 89 percent YoY) in the last two years indicating that the supply-side interventions are in place to address inflationary pressures in the crop (4.2 percent MoM), the report said.

On the exports front, the decline was more prominent in petroleum products (-10.6 percent YoY) while the Non-oil category was flat at 0.5 percent YoY. Within the major export commodities, gems and jewellery is the only category to report a decline (-2.9 percent) on a 4 Yr CAGR, raising concerns on the discretionary demand in the global market, the report said.

“We expect crude prices to remain elevated in the near term as this spike is not demand-led but is engineered through curtailing supply by oil-producing countries. Our expectation of CAD at 1.4 percent of GDP in FY24 would be at risk if the monthly run rate of trade deficit breaches the $20bn mark, currently at $ 19.3bn,” the report added.

[With Inputs from IANS]

For all the latest updates, download PGurus App.

• Author
• Recent Posts

PGurus Newsdesk

Latest posts by PGurus Newsdesk (see all)

• BJP drops 2-term sitting MP Poonam Mahajan; fields 26/11 counsel Ujjwal Nikam from Mumbai North Central - April 27, 2024
• RBI sets criteria for Small Finance Banks seeking Universal Banks license - April 27, 2024
• 16 Indian crew members on seized cargo ship to be released soon: Iran Foreign Minister - April 27, 2024