Consider the information provided in the figure below relating to India's foreign trade in 1997-98 and the first eight months of 1998-99.
Total trade with a region is defined as the sum of exports to and imports from that region.
Trade deficit is defined as the excess of imports over exports. Trade deficit may be negative.
A:USA. B:Germany C:Other EU. D:U.K. E:Japan F:Russia
G:Other East Europe H:OPEC I:Asia J:Other LDCs K:Others
Assume that the average monthly exports from India and imports to India during the remaining four months of 1998-99 would be the same as that for the first eight months of the year. What is the percentage growth rate in India’s total trade deficit between 1997-98 and 1998-99?
Since the increase in imports and exports is at average, the exports and imports in the next 4months will be half of their respective first eight months.
Exports in first 8 months of 1998-1999 is $21436 so, in next 4 months it will be 21436/2 = 10718
Total exports= 21346+10718=32154.
Similarly, total imports= 28126+ 28126/2 = 42189
Trade deficit = 42189-32064= 10035
Trade deficit in 1997-98= 40779-33979=6800.
Increase = (10035-6800)/6800 = 47.5%
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