Trade imbalance

Policy intervention would be required at different levels to contain the fallout of increasing global uncertainty. Central banks in advanced economies are forced to sharply increase interest rates and tighten financial conditions to contain inflation, even as economic recovery from the pandemic-induced disruption is weakening. Slower global growth, as a result, will affect exports from a developing economy like India, while tightening financial conditions would influence capital flows. In this context, the latest trade data underscores that the external sector will need careful management. India’s merchandise trade deficit increased to a fresh high of $31.02 billion in July compared to $26.18 billion in June. The trade deficit was $10.63 billion in July 2021. While exports declined marginally compared to the same period last year, imports went up by 43.59 per cent. The trade deficit for April-July crossed $100 billion compared to about $42 billion during the same period last year.



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First Published: Wed, August 03 2022. 22:03 IST