India's Trade Deficit Widens Forecast

Meritz Securities has issued a report cautioning that India's trade deficit, which was lower than expected in March 2026, is likely to widen in the coming months and in FY27. This anticipated deterioration is attributed to external shocks, slowing global demand, and structural pressures on the import bill. The temporary dip in March's deficit was largely due to a sharp drop in Gold and Petroleum imports, partly caused by supply disruptions like the closure of the Strait of Hormuz. However, these disruptions are expected to normalize, leading to increased imports. Exports are also projected to remain fragile due to weak global demand. Meritz Securities forecasts India's current account deficit (CAD) to widen to $70.1 billion (1.6% of GDP) in FY27, with potential to rise further if Petroleum prices average $85-95/bbl.