India's Q3 FY25 CAB deficit to be $10 bn; Q4 may see surplus: Ind-Ra

Overall, Ind-Ra expects the goods trade deficit to decline to around $60 billion in the fourth quarter (Q4) of FY25.

“All in all, Ind-Ra expects CAB to turn into a surplus of under 1 per cent of GDP in Q4 FY25,” said Paras Jasrai, senior analyst and economist, Ind-Ra.

The global economic uncertainty has been on a rise post the US elections. The new US administration’s potential tariff hikes have sparked capital outflows from emerging economies and prompted businesses to adopt a more cautious approach. The global trading activity, however, has been performing strongly so far. Global goods trade recorded a YoY growth of 2.8 per cent—the sharpest increase in over two years in Q3 FY25. The World Trade Organization (WTO) anticipates this momentum to carry into 2025, projecting merchandise goods trade volume to rise by 3.0 per cent YoY, marking the fastest growth since the COVID-impacted year of 2021.

The global manufacturing PMI in February 2025 touched an eight-month high of 50.6. The renewed momentum has been led by the developed markets getting gradual support from the monetary easing by the Federal Reserve and European Central Bank, Ind-Ra said in a press release.

India’s merchandise imports are expected to moderate to around $174 billion in Q4 FY25 due to lower imports of essential commodities as the country’s merchandise exports rose by 3.2 per cent YoY in Q3 FY25, reaching $ 109.0 billion—up from a 12-quarter low of $ 103.5 billion in the previous quarter.

The country’s merchandise exports are estimated to increase to a four-quarter high of around $114 billion in Q4 FY25. India’s merchandise imports grew 6.0 per cent YoY in Q3 FY25. Sequentially, goods imports firmed up further to a nine-quarter high of $186.7 billion in Q3 FY25 in line with Ind-Ra’s expectations ($192 billion). They were led by consumer non-durable and durable goods which grew 20.3 per cent YoY and 15.9 per cent YoY, respectively, during Q3 FY25.

ALCHEMPro News Desk (SG)