India’s merchandise exports contracted 12.2 per cent year-on-year (YoY) in December to $34.48 billion as slowing external demand amid recession fears in developed economies continued to weigh on outbound shipments, the data released by the commerce and industry ministry showed. Still in the first nine months of the current financial year, exports grew nearly 9 per cent.
The latest decline in the value of outbound shipments can also be attributed to the statistical effect of a high base because December 2021 witnessed the second-highest monthly exports in the previous financial year at $39.3 billion.
“There are a lot of headwinds. Despite that, our export competitiveness has held its head high… It is clear that there are headwinds and there is a recession in our export countries (markets). Therefore, we need to look at export targets in a manner that we are able to reap benefits in relation to countries witnessing GDP growth, such as Brazil and other Latin American nations,” Commerce Secretary Sunil Barthwal said on Monday.
Imports last month also contracted 3.46 per cent to $58.24 billion, amid falling commodity prices. The trade deficit widened to $23.76 billion, against $21.06 billion in November last year but was still lower than the all-time high of $29 billion in September.
Barthwal said that the decline in imports could be because of a combination of factors. For instance, some imports are related to exports. If there are recessionary trends and
the export outlook is weak, demand for the import of raw materials of outbound products also declines.
“We have consciously chosen to reduce gold imports. Some products, such as pharmaceuticals and crude oil, are being purchased at lower prices. Imports also decline if import substitution is taking place,” Barthwal told reporters.
Aditi Nayar, chief economist at ICRA, said the softness in prices of some commodities contained imports to an extent, stabilising the trade deficit near the previous month’s level — well below the average $26-billion gap seen in the six months ended October 2022.
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