The $400 billion story: India's export boom mirrors neighbourhood surge

Many Asian peers exporting have seen increasing overseas demand

India’s surging export numbers is similar to a trend seen in other countries in the neighbourhood.

Vietnam, Indonesia, South Korea and Japan all have export numbers which are near or at their highest in at least a decade; shows an analysis of data from the World Trade Organisation.  The international numbers appear with a lag. Numbers till January have been considered as a common cut-off for the analysis.

The 12-month rolling sum of monthly exports for India was in excess of $400 billion as of January, according to WTO data. This was the highest for a similar rolling period going back at least a decade. The government in a statement on Monday said that figures until March show an all-time high annual export of $417.81 billion for financial year 2021-22.

“India achieved an all-time high annual merchandise exports of $417.81 billion in FY 2021-22, an increase of 43.18 per cent over $291.81 billion in FY21 and an increase of 33.33 per cent over $313.36 billion in FY2019-20,” it said.  

Japan was at $755 billion in 12-month rolling terms in January or within around 10 per cent of its ten-year record of $840 billion achieved in May 2012. Others including South Korea, Vietnam and Indonesia had recorded their highest 12-month rolling exports in January (see chart 1).

Japan’s exports primarily consist of manufactured goods with a large component going to China, Europe and the US. Motor cars were its largest export item as per the latest available WTO trade profile. It was electronic integrated circuits for South Korea and radio-telephony transmission tools for Vietnam.  Coal; briquettes, ovoids were Indonesia’s biggest export.

While all countries are seeing an export boom, some are importing more than they export. The current account balance can broadly be seen as a measure of a country’s imports versus its exports. The International Monetary Fund projected a current account surplus for Japan, South Korea and Vietnam in 2022 as part of its October 2021 World Economic Outlook report.  India and Indonesia were expected to have a deficit (see chart 2).

The World Economic Outlook Report noted that global current account balances are set to widen for the second year in a row in 2021 after already doing so in 2020 because of the pandemic. The global current account balance is the sum of absolute deficits and surpluses. It noted that the widening is an outcome of exports of certain goods such as medical equipment and work-from-home electronics. Fewer people travelling and lower oil prices also played a part.

“For 2021 the widening reflects a larger deficit in the United States from the increased fiscal support and corresponding increases in surpluses. Current account balances are expected to narrow over 2022–26, reflecting anticipated declines in the US deficit and China’s surplus,” it said.

The note came before Russia’s military action in the Ukraine caused oil prices to soar. Higher oil prices are a negative for net importers like India. India imports more than 80 per cent of its crude requirements.