India's November merchandise trade deficit at $37.84 billion

AI Sentiment: Bearish
Reason: The article is bearish for India's economy, as it discusses a significant increase in the country's merchandise trade deficit, with imports outweighing exports. This could pressure the country's current account deficit and affect the value of the Indian Rupee.

In a recent economic update, India reported a merchandise trade deficit of $37.84 billion in November, as compared to the previous year. This is a significant increase from the preceding month's deficit of $10.19 billion, and the highest recorded since March 2021.

The data, released by the government, showed that imports surged 62.2% from a year earlier to $58.62 billion, propelled by soaring costs of petroleum products and gold. The rise in global oil prices has been a significant factor, with petroleum product imports increasing by 140% to $15.25 billion. Gold imports also saw a significant uptick, escalating by 80% to $5.72 billion.

This surge in imports overshadowed the growth in exports, which rose by 26.5% to $29.88 billion. The export sector has been buoyed by strong demand for engineering goods, petroleum products, and chemicals, amongst others. The engineering goods sector saw an increase of 44% from the previous year, while petroleum products and chemicals increased by 178% and 25% respectively. Other sectors such as gems and jewellery also experienced growth.

However, despite the growth in exports, the value of imports has outweighed exports, resulting in an increased trade deficit. This trade imbalance comes at a time when India is grappling with inflationary pressures and a potential slow-down of economic recovery due to the spread of the new Omicron variant of the COVID-19 virus.

Experts suggest that the widening trade deficit could exert pressure on the country's current account deficit, which in turn could affect the value of the Indian Rupee in foreign exchange markets. Nevertheless, the government is hopeful that the situation will improve with the easing of global commodity prices and the strengthening of domestic economic activities.