Exports Dip Again And Trade Deficit Hits 5-Month High
The trade imbalance in May increased to a five-month high of $22.1 billion as India’s exports of goods dropped 10.3% to $34.98 billion while imports decreased at a slower 6.6% rate to $57.1 billion.
Points to Ponder:
- In May, India’s merchandise exports decreased by 10.3% to $34.98 billion. Although it was a smaller reduction than April’s dip of 12.6%, this represents the sixth decline in the previous eight months. Only 0.8% of May’s exports were above April’s six-month low.
- May imports decreased at a slower 6.6% annualised rate to $57.1 billion from the previous month. When comparing May’s imports to April’s, which had a 15-month low level, imports rose sequentially by 13.8%.
- The difference between exports and imports, or the trade imbalance, grew to a five-month high of $22.1 billion in May. The trade imbalance has now exceeded $20 billion for the first time since December 2022.
- Geopolitical tensions and recessionary fears brought on by monetary tightening are blamed for the drop in exports in 2023. The reduction in consumer expenditure in developed countries affects India’s export growth.
- In light of the World Trade Organization’s revision of the annual growth rate of global trade upward, the Indian Commerce Ministry anticipates a resurgence of demand from July through August 2023.
- The first two months of the 2023–24 fiscal year have seen a cumulative reduction in merchandise exports of 11.4% and a decrease in the import bill of 10.24%. Comparing April and May to the same time last year, the trade gap shrank by almost 8%.
- Engineering goods, which have recently made up a sizable portion of India’s exports, fell by more than 4% in May to $9.3 billion. In the first two months of the fiscal year, the overall decline was 6%.