The trade deficit widened to USD 6.3bn in May. This was mainly driven by a steeprise in core (non-oil-non-gold) imports after two consecutive months of weakperformance. Growth in electronic goods, transport equipment and electricalmachinery picked up pace, reflecting strong urban consumption demand andsome resilience in capex. Meanwhile, exports strengthened further, led primarilyby engineering goods and 'gems & jewellery'. Some near-term softness in exportscan be expected given the below-50 reading of new export orders in Maymanufacturing PMI. Despite the deterioration in May, the trade deficit remains lowby historical standards. However, the deficit could inch up gently in the comingmonths, on the back of higher oil prices.