Outbound shipments from India increased for the first time in seven months and merchandise exports grew 6% in September, up from the 5.3% suggested by previously released provisional data, mainly driven by an increase in demand. engineering goods, petroleum products, pharmaceuticals and ready-made clothing.
Exports increased to $ 27.6 billion, while imports contracted 19.6% to $ 30.3 billion, resulting in a trade deficit of $ 2.7 billion, according to data released by the Ministry of Commerce.
In the six months ended September 30, exports were down 21.3% to $ 125.3 billion, while imports contracted 40.1% to $ 148.7 billion, creating a deficit. $ 23.4 billion trade.
India’s merchandise trade has weakened even before the covid-19 pandemic hit the economy and external demand. In 13 of the last 15 months as of June 2019, the country’s exports have been negative.
However, since March this year, both exports and imports began to decline by high double digits, even temporarily leading to a trade surplus in June for the first time in 18 years.
Data compiled by the World Trade Organization (WTO) showed that world merchandise trade declined by 21% in the June quarter. The WTO now projects that the volume of world merchandise trade will decline by 9.2% in 2020, followed by an increase of 7.2% in 2021. In April, the trade body had projected that world merchandise trade would fall between a 13% and 32% in 2020 due to the pandemic.
Aditi Nayar, Chief Economist at ICRA Ltd, said the trade deficit fell in September compared to August due to the rebound in exports, as well as the sharp fall in gold imports. “The reasonably wide rebound in merchandise exports in September has been a relief, and signs of their sustainability are eagerly awaited in light of the second wave of COVID-19 infections that many trading partners are experiencing,” he added.
Gold imports fell 53% in September to $ 601 million after a sharp increase in July and August, while imports of machinery and transportation equipment also saw sharp falls, indicating weak domestic demand.
India’s economy contracted 23.9% in the June quarter, hit by the double whammy of a contraction in demand and a shock in supply due to a nationwide lockdown considered the world’s toughest imposed. to contain the spread of the coronavirus. The International Monetary Fund has projected that the Indian economy will contract by 10.3% in fiscal year 21, while the RBI has estimated the contraction at 9.5% during the year.
Nayar said the decline in gold imports in September suggests that stifled demand related to the lockdown period has eased. “However, imports may increase in the next two months with the arrival of the holiday and wedding season, as well as the potential for an increase in rural demand after the kharif harvest,” he added.
Prahalathan Iyer, Managing Director of Research and Analysis at India Exim Bank, said the recovery in the export sector in September could only be considered sustainable if there is also a rebound in non-oil and non-gold imports. “Non-oil imports continue on a negative path, which is cause for concern. We need to wait and watch the trend (of exports) for a couple of months to see if growth is sustainable in the second half of fiscal year 21, “he added.
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