The global economic downturn has begun to affect India’s trade

The incipient global recession has begun to affect India.

In December, India’s merchandise exports declined 12.2% to $34.5 billion, from a year ago, according to government data released yesterday (Jan. 16). This marked the second contraction in three months, owing to a slowdown in demand. Imports also shrank, albeit at a slower pace of 3.5%, to $58.2 billion.

“Weakening of global demand on account of rapid tightening of global financial conditions and persistence of heightened geopolitical uncertainty would continue to impinge upon export momentum in the coming quarters,” economists at QuantEco Research said in a note today (Jan. 17).

In value terms, a fall in commodity prices globally also impacted the export and import figures for December 2022.

Under exports, 19 of the 30 key segments declined from a year ago (pdf). These include petroleum products (26.9%), engineering goods (11.9%), gems and jewellery (15.2%), and drugs and pharmaceuticals (1.9%). On the other hand, imports of key items like gold, silver, electronic goods, and project goods also contracted.

India’s exports to the US were highest at $59.6 billion in April-December 2022. Others that followed are the UAE, Netherlands, Bangladesh, and Singapore.

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