India's merchandise import jump in May signals stable local economy: Economists

MUMBAI: A sequential increase in merchandise imports in May that led to the trade deficit widening to a five-month high signalled a stable localeconomy,economistssaid.

Merchandise imports advanced 14.5%overthepreviousmonthto$57.1 billion, while exports inched up 0.7% to$35billion.

The merchandise trade deficit widened to $22.1 billion in May from $15.1 billion in the previous month. "The recovery in imports points to domestic demand resilience," said Madhavi Arora, lead economist at EmkayGlobal.Aroraalsopointedtoa seasonal trend, citing a typical increase in imports in May after a slumpinthepreviousmonth.

Gold imports more than tripled to $3.7 billion - the highest level since October. Oil imports climbed 3%, while core imports, barring oil and gold,advanced12.1%.

Imports of industrial goods such asmachinetoolsandconsumergoods likeelectronicsgrewatarobustpace, indicating resilience in domestic demand, said Rahul Bajoria, Chief IndiaEconomistatBarclays.

Fertilizer imports also jumped significantly ahead of the kharif sowingseason,Bajoriaadded.

Economists, however, do not see thewidermerchandisetradedeficitin May swaying expectations of a manageable current account deficit inthisfinancialyear.

"Falling commodity prices, an expandingservicestradesurplusand rising remittances have supported the improvement in external metrics so far," said Bajoria. "This year, a slowing global economy implies commodity prices will trend lower on average compared with the previous year."

Arora sees the current account deficit settling at 1.9% of the gross domestic product in this fiscal year endingMarch31.