The spike in trade deficit to an all-time high of $31.46 billion in October from $19.41 billion in September because of oil, gold and silver imports may have come as a shock, but economists see the spurt as a one-off.

Unperturbed by the increase in the trade deficit, economists estimated that for the current fiscal the current account deficit (CAD) is likely to be about 1.4 to 2 per cent of GDP. In 2022-23, CAD was $67 billion, or 2 per cent of that year’s GDP.

“Despite the shock on the trade deficit front, we retain our FY24 current account deficit estimate at 1.9 per cent of GDP,” Gaura Sen Gupta, economist at IDFC First Bank, said.

“This is because the October print is likely to be a one-off, with gems and jewellery imports likely to normalise from November,” he said.

Imports increased by 12.3 per cent to $65.03 billion in October due to a jump in gold imports. Inbound shipments of gold rose by 95.41 per cent to $7.23 billion. The oil imports increased by 8 per cent to $17.66 billion during the month, the data showed. Exports rose 6.21 per cent to $33.57 billion.

Morgan Stanley said: “We anticipate the trade deficit to moderate considerably in November and December.” It estimated CAD for the December quarter to be within 2-2.4 per cent of GDP.

Trade deficit during the seven-month period was $147.07 billion against $167.14 billion a year ago. Trade deficit in goods in October last year stood at $26.31 billion.

A trade deficit, the largest component of the CAD, occurs when the value of the goods and services a country imports exceeds that of its exports.

Sonal Varma of Nomura said: “We expect the passage of Diwali to help correct the trade deficit in November, but still high oil/gold prices and stable near-term growth mean the goods trade deficit is likely to remain elevated. We expect CAD to widen to 2.2 per cent in Q4 CY23 from 0.8 per cent in Q3, but remain sustainable at 1.4 per cent in FY24 versus 2.0 per cent in FY23, partly due to higher services trade balance.”

“While the April-September 2023 CAD is tracking at sub 1.2 per cent, October-December started on an ominous note, with likely widening in trade deficit versus the last two quarters,” Madhavi Arora and Harshal Patel of Emkay Global Financial Services said.

“We expect CAD for FY2024 to print in a range of 1.8-2.0 per cent of GDP,” Aditi Nayar, chief economist, Icra, said.