Trade slowdown worsened in December 2018, as merchandise export growth plunged for a second straight month to just 0.34 per cent and imports witnessed their first contraction since September 2016.
Trade deficit, consequently, eased to $13.1 billion in December, the lowest since February last year, showed the data released by the Commerce Ministry on Tuesday.
Exports rose only marginally to $27.93 billion in December, against $27.83 billion a year before, as a contraction in outbound shipments of products – including engineering goods, gems and jewellery and certain farm items – offset a decent increase in those of petroleum products, chemicals and electronics. This indicates while the sharp rupee depreciation may have weighed on import demand, the country’s ability to exploit the situation to boost exports is far from strong, said analysts. Non-oil and non-gold imports witnessed a 1.86 per cent drop, while such exports rose just 1.08 per cent in December.
Importantly, exports of some farm items dropped – oilseeds by 27 per cent, tea by 11 per cent, coffee by 35.3 per cent and fruit and vegetable by 13 per cent – while those of rice inched up by only 1.3 per cent. Even exports of meat, dairy and poultry items plunged by 24.6 per cent in December, having already contracted by over 31 per cent in the previous month, while marine exports declined by 7.4 per cent.
The shipment of engineering goods, a prime driver of export growth in recent months that also accounts for around a fourth of total exports, dropped 3.1 per cent, while gems and jewellery exports fell 19.2 per cent. Petroleum product exports rose 13.2 per cent to $4.2 billion in December.
As for merchandise imports, a 12 per cent drop in crude oil prices (compared with a year earlier) prevented imports of petroleum products from spiralling sharply in December (such purchases rose only 3.2 per cent to $10.67 billion). Imports of gold dropped 24.3 per cent (to $2.57 billion) and those of pearls and precious stones plunged by 28 per cent.
Calling for urgent support — including higher credit and fiscal incentives — to prop up exports, FIEO president Ganesh Kumar Gupta said sectors such as petroleum, chemicals, plastic & linoleum and garments, which had witnessed high growth in the previous month, recorded slower expansion in December.
Overall, merchandise exports during the April-December period rose 10.2 per cent to $245.44 billion, while imports grew at a sharper pace of 12.6 per cent. At $82.7 billion, overall trade deficit (including services trade) between April and December is estimated to be almost 19 per cent higher than a year before.
With FE inputs