The trade deficit for December 2022 has been reduced from $24.24 billion to $22.1 billion. file | Photo Credit: Reuters
India’s merchandise exports fell for the second month in a row this January, with the value of shipments falling 6.6% to $32.91 billion, but a concurrent decline in imports widened the trade deficit to the lowest in a year at $17.75 billion.
The commerce and industry ministry also sharply revised the goods trade numbers for December 2022, raising the export figure by $3.6 billion to $38.07 billion, indicating a year-on-year contraction in that month, while Earlier this estimate was 12.2%. This is the biggest revision in the export numbers so far this year, followed by an upgrade to $3.1 billion in August 2022 and $2.85 billion in November 2022.
Imports, which fell 3.6% in January to $50.66 billion, were also revised upward by about $2 billion for December 2022 to $60.18 billion from $58.2 billion estimated earlier. Thus the trade deficit for December narrowed to $22.1 billion from $24.24 billion.
Based on the revised numbers, the sequential decline in both exports and imports is significant through January, with outbound shipments declining 13.6% and imports falling 15.8% from December 2022 levels.
At a cumulative level, merchandise exports are set to grow 8.5% to $369.25 billion in the first 10 months of 2022-23, with Commerce Secretary Sunil Barthwal expressing optimism that “this growth momentum will continue despite strong global headwinds”.
On the other hand, imports are set to increase by 21.9% to $602.2 billion between April 2022 and January 2023. The ministry attributed this to the paradox of a slowing global economy and strong domestic growth despite external headwinds.
two way effect
“It seems to be having a two-pronged effect on India’s trade. On the one hand, it is reducing exports as global growth decelerates, resulting in lower export demand, while on the other hand imports are rising as domestic demand remains resilient due to relatively higher growth.
As many as 16 of India’s top 30 export items reported declines, with handlooms, plastics and linoleum as well as jute products down by over 30%. Other labor-intensive sectors also reported a significant contraction in exports, including carpets (-27.4%), gems and jewelry (19.3%), man-made yarn (-21.1%), handicrafts (-8%), and readymade garments. Are included. -3.5%).
Exports of engineering goods, which account for about a quarter of India’s exports, have fallen nearly 10% in recent years. On the other hand, gold imports, which have a bearing on the current account deficit, fell 70.76% to just Rs 0.70 billion in January, the ministry reported.
“The material decline in imports during January was partly driven by a decline in gold imports, but even as petroleum shipments fell sharply,” said Rahul Bajoria, economist at Barclays and Barclays. Most reflect inventory adjustments as they come despite energy prices remaining largely stable.” Shreya Sodhani said in a research note.
Non-oil, non-gold imports remained weak at $33.7 billion, indicating lower commodity prices and somewhat lower demand for exports, he said, expecting the trend to persist.