In the 95th round of RBI’s Survey of Professional Forecasters, it is predicted that India’s merchandise imports will increase by 2.5% while exports will only rise by 1.2% in FY26. This forecast indicates a potential widening trade gap, leading to a current account deficit of 0.8% of GDP.
Key Forecasts: Imports Outpacing Exports
- Merchandise exports (FY26): Expected to grow 1.2%
- Merchandise imports (FY26): Forecasted to grow 2.5%
- CAD (FY26): Estimated at 0.8% of GDP
- CAD (FY27): Expected to edge up to 0.9% of GDP
The imbalance is expected to persist into FY27, with exports growing by 4.9% and imports by 6.0%, potentially weakening India’s external sector resilience due to global demand fluctuations and geopolitical uncertainties.
What’s Driving Import Growth?
- Rising demand for electronics, oil, gold, and capital goods
- Gradual recovery in domestic consumption leading to increased input imports
- Potential currency depreciation making imports more expensive
On the other hand, sluggish export growth may be attributed to slower global trade recovery, geopolitical tensions, and inflationary pressures in key markets like the EU and the US.
Wider Economic Outlook
- Real GDP growth (FY26): Projected at 6.4%
- Real GDP growth (FY27): Expected to rise to 6.7%
Despite trade concerns, the overall economic outlook remains positive with healthy domestic consumption and investment trends:
Consumption and Investment Trends
- Private Final Consumption Expenditure (PFCE): Set to grow 6.5% in FY26 and 6.9% in FY27
- Gross Fixed Capital Formation (GFCF): Expected to rise 6.8% in FY26 and 7.2% in FY27
These figures indicate a robust investment and consumption recovery, potentially sustaining elevated import demand.
Key Takeaways for Competitive Exams
- India’s merchandise imports are projected to outpace exports in FY26 according to RBI’s survey.
- The trade gap may widen, leading to a current account deficit of 0.8% of GDP.
- Rising demand for various goods and potential currency depreciation are driving import growth.
- Sluggish export growth is influenced by global trade recovery, geopolitical tensions, and inflationary pressures.
- The wider economic outlook remains positive with healthy consumption and investment trends.
