 "May exports plummet 20.19% at $22.34 bn")
Merchandise exports fell for the sixth straight month in May, plunging 20.19 per cent to $22.34 billion, compared with $28 billion in the corresponding period last year, owing to weak global demand and a fall in crude oil prices. Exports had declined 13.96 per cent in April and 21.06 per cent in March.
But the headline number might be overstating the actual fall. Part of the decline is due to currency fluctuations. In rupee terms, exports declined 14.1 per cent in May.
For the first two months of this financial year, exports contracted 17.21 per cent to $44.4 billion, compared with $53.63 billion in the year-ago period, according to data released by the Ministry of Commerce and Industry on Tuesday.
India’s exports have been falling since December, the longest period of decline since 2009. The subdued global economy has hit exports of other countries, too. For China, however, exports fell only 2.5 per cent in May.
The low global demand also hit India’s services exports, which fell for the second consecutive month in April. These exports declined 4.5 per cent year-on-year to $13.1 billion in April.
Merchandise imports stood at $32.75 billion in May, down 16.52 per cent compared with $39.23 billion in the corresponding month last year. As such, the trade deficit stood at $10.4 billion in May, against $11 billion in April.
“The softening of the merchandise trade deficit in May relative to the year-ago period primarily benefits from the decline in the value of net oil imports and, therefore, conceals the continuing weakness in export momentum. The contraction in export of high value-added items such as engineering and electronic goods in May is a cause for concern,” said Aditi Nayar, senior economist, Icra.
In April, India recorded a surplus in services, as imports stood at $7.32 billion, resulting in a trade balance of $5.7 billion, against $5.6 billion in the year-ago period.
This will help India narrow its current account deficit (CAD) further. YES Bank chief economist Shubhada Rao cautioned against risks to CAD from rising oil prices and shrinking exports. She, however, said the deficit would remain at a comfortable level.
In May, exports of petroleum, gems & jewellery, electronic goods and engineering products fell 59.10 per cent, 12.94 per cent, 17.08 per cent and 8.02 per cent, respectively. The decline in exports in May was broad-based and its growth was likely to remain weak, according to an analysis by CRISIL.
“On the exports front, two segments that have primarily contributed to the decline in recent months are petroleum and gems & jewellery. While the decline in the former can largely be attributed to subdued oil prices, the weakness related to gems & jewellery exports signals lack of external demand,” said a report by YES Bank.
It added 38 per cent of India’s jewellery exports were accounted for by the US and demand in that country would be subdued, as buyers would stay away due to concern over income growth and an impending rate increase by the US Federal Reserve later this year.
Exporters expressed concern at the decline in exports. “It is matter of serious and grave concern…The government should take note and act fast to arrest the decline,” said S C Ralhan, president and chief executive of the Federation of Indian Export Organisations. The government had announced a new foreign trade policy in April.
In 2014-15, exports contracted 1.23 per cent to $310.5 billion from $314.4 billion the previous year. For April-May, overall imports stood at $65.8 billion, against $74.95 billion in the corresponding period last year, a fall of 12.21 per cent. Consequently, the trade deficit for the first two months of this financial year widened to $21.39 billion from $21.32 billion in the year-ago period.
In May, gold imports rose 10.47 per cent to $2.42 billion from $2.19 billion in May 2014. However, economists expect demand for the commodity to moderate.
But the headline number might be overstating the actual fall. Part of the decline is due to currency fluctuations. In rupee terms, exports declined 14.1 per cent in May.
For the first two months of this financial year, exports contracted 17.21 per cent to $44.4 billion, compared with $53.63 billion in the year-ago period, according to data released by the Ministry of Commerce and Industry on Tuesday.
India’s exports have been falling since December, the longest period of decline since 2009. The subdued global economy has hit exports of other countries, too. For China, however, exports fell only 2.5 per cent in May.
The low global demand also hit India’s services exports, which fell for the second consecutive month in April. These exports declined 4.5 per cent year-on-year to $13.1 billion in April.
Merchandise imports stood at $32.75 billion in May, down 16.52 per cent compared with $39.23 billion in the corresponding month last year. As such, the trade deficit stood at $10.4 billion in May, against $11 billion in April.
“The softening of the merchandise trade deficit in May relative to the year-ago period primarily benefits from the decline in the value of net oil imports and, therefore, conceals the continuing weakness in export momentum. The contraction in export of high value-added items such as engineering and electronic goods in May is a cause for concern,” said Aditi Nayar, senior economist, Icra.
In April, India recorded a surplus in services, as imports stood at $7.32 billion, resulting in a trade balance of $5.7 billion, against $5.6 billion in the year-ago period.
This will help India narrow its current account deficit (CAD) further. YES Bank chief economist Shubhada Rao cautioned against risks to CAD from rising oil prices and shrinking exports. She, however, said the deficit would remain at a comfortable level.
In May, exports of petroleum, gems & jewellery, electronic goods and engineering products fell 59.10 per cent, 12.94 per cent, 17.08 per cent and 8.02 per cent, respectively. The decline in exports in May was broad-based and its growth was likely to remain weak, according to an analysis by CRISIL.
“On the exports front, two segments that have primarily contributed to the decline in recent months are petroleum and gems & jewellery. While the decline in the former can largely be attributed to subdued oil prices, the weakness related to gems & jewellery exports signals lack of external demand,” said a report by YES Bank.
It added 38 per cent of India’s jewellery exports were accounted for by the US and demand in that country would be subdued, as buyers would stay away due to concern over income growth and an impending rate increase by the US Federal Reserve later this year.
Exporters expressed concern at the decline in exports. “It is matter of serious and grave concern…The government should take note and act fast to arrest the decline,” said S C Ralhan, president and chief executive of the Federation of Indian Export Organisations. The government had announced a new foreign trade policy in April.
In 2014-15, exports contracted 1.23 per cent to $310.5 billion from $314.4 billion the previous year. For April-May, overall imports stood at $65.8 billion, against $74.95 billion in the corresponding period last year, a fall of 12.21 per cent. Consequently, the trade deficit for the first two months of this financial year widened to $21.39 billion from $21.32 billion in the year-ago period.
In May, gold imports rose 10.47 per cent to $2.42 billion from $2.19 billion in May 2014. However, economists expect demand for the commodity to moderate.