India’s merchandise trade deficit moderated a tad to USD 22.0 bn in Dec-21 from its record high level of USD 22.9 bn in Nov-21. We note the following noteworthy traits: i) this is the 3rd instance of higher than USD 20 bn trade deficit print in the post pandemic period, ii) both exports and imports register their individual monthly record simultaneously for the first time in FY22, iii) early evidence of easing of supply disruption in case of coal and port congestion, and iv) supply disruptions continue to persist for edible oil and semiconductors. While the spread of Omicron is still unfolding at an alarming pace, early evidence points towards lower severity vis-à-vis previous waves. Being mindful of these evolving risks, we had recently upgraded our FY22 current account deficit forecast to USD 48 bn from USD 40 bn earlier.
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