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