India’s merchandise exports grew 11.9% YoY in February 2024 (the fastest in 20 months), with exports of engineering goods (+15.9% YoY), petroleum products (+5.1% YoY), chemicals (+33% YoY) and pharmaceuticals (+22.2% YoY) joining the steadily-soaring electronics exports (+54.8% YoY) in driving the recovery.
Imports grew 12.2% YoY, primarily because of a 133.8% YoY increase in gold imports, while oil imports were unchanged YoY despite a 1.1% YoY rise in Brent crude price.
Services exports grew 10.8% YoY and services imports 0.2% YoY in Jan’24, and the services surplus widened by 17.7% YoY. For the fiscal year-to-date, the services trade surplus widened 20% YoY.
Given a quarterly incomes surplus of a bit more than $12 billion, the 8.2% YoY reduction in the merchandise deficit should yield a current account deficit of just 0.6% of gross domestic product in FY24.
ISM manufacturing new orders suggest much stronger export growth by Q2 FY25 and beyond, while abundant supplies of shale should kept Brent below $90/barrel of oil next year, so we expect a current account surplus of 0.5% of GDP in FY25.