Trade deficit to touch an all-time high of $21bn in May: Nomura

Posted By: Religare
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Trade deficit to touch all-time high of $21bn in May: Nomura
The trade deficit in May is expected to be at an all-time high of USD 21 billion due to sluggish external demand, high gold imports and seasonally higher fertiliser and chemical imports, said Nomura.

In a note ahead of the release of the official data later this week, Nomura said, "We expect a record-high trade deficit of USD 21 billion in May from USD 17.8 billion in April."

The trade deficit, according to Nomura, However, will improve in June as the poor numbers on the trade deficit front for April and May would mean the current account deficit would come under pressure again.

The report said that the current account gap will widen to 5.5 to 6 per cent of the GDP for the April-June quarter.

"Financing the current account deficit, therefore, remains a concern, and it is also one of the main reasons why we expect no repo rate cut in June," the note said, referring to its expectations from the Reserve Bank's mid-quarter policy review scheduled for June 17.

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