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Tuesday, January 21, 2020

November exports shrink 0.34% amid pressure on manufacturing

Commerce Ministry data on Friday showed imports, too, fell for a sixth straight month in November, by 12.7 per cent against a fall of 16.3 per cent in October, mirroring a collapse in domestic demand.

By: ENS Economic Bureau | New Delhi | Published: December 14, 2019 5:06:59 am
india gsp beneficary, india us trade ties, donald trump, us, benefits to india, select trade list, Generalised System of Preferences, india us relations, india us trade relations, indian express The decline in goods trade is the latest in a series of crucial indicators — industrial output shrank 3.8 per cent in October.

Merchandise exports shrank 0.34 per cent year-on-year in November to $25.98 billion, the fifth contraction in the past eight months, despite a relatively favourable base, as faltering domestic manufacturing on top of external headwinds continue to bite.

Commerce Ministry data on Friday showed imports, too, fell for a sixth straight month in November, by 12.7 per cent against a fall of 16.3 per cent in October, mirroring a collapse in domestic demand. However, goods trade deficit in November shot up to $12.1 billion against $11 billion a year ago, as contraction in imports narrowed month-on-month.

Though the contraction in exports was less broad-based last month, as many as 17 of the 30 key segments witnessed a decline.

The decline in goods trade is the latest in a series of crucial indicators — industrial output shrank 3.8 per cent in October; retail inflation hit a 40-month high and non-food credit growth is hovering around a two-year low — which reinforced fears of a protracted slowdown in the economy, especially after growth hit an over six-year low of 4.5 per cent in the September quarter.

However, policy-makers can seek some comfort from the fact that core exports (non-oil and non-gems and jewellery) rose 4.8 per cent in November that helped reverse a slide in such shipments until October this fiscal.

However, the persistent contraction in non-oil and non-bullion imports (12 per cent in November and 7.4 per cent in April-November period) reinforced fears of an acute domestic consumption slowdown.

Interestingly, gold imports rose 6.6 per cent in November after months of fall, likely reflecting a slow return to demand due to the marriage season.

However, thanks to the persistent import contraction, trade deficit in the first two months of the third quarter (October-November) has averaged just $11.6 billion, against $14 billion in the previous six months. This will ease pressure on the country’s current account balance, deficit in which had worsened sequentially to 2 per cent of GDP in the June quarter from 0.7 per cent in the January-March period; although it was still better than 2.3 per cent in the first quarter of FY19.

A 3.7 per cent year-on-year fall in Brent crude oil prices has contributed to a drop in both exports and imports of petroleum. With this, overall goods exports in the April-November period contracted 2 per cent to $211.9 billion, while imports shrank 8.9 per cent to $318.8 billion. FE

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