India’s merchandise exports to record biggest decline in two years in December 2022, export products worth $34.5 billion 12.2% lower than a year ago, It was the second time in three months that shipments declined year-on-year and top commerce ministry officials sought to calm nerves citing global headwinds that were posing challenges for Indian goods. These include recessionary clouds in Europe and the US, the COVID-19 situation in China and a return to protectionism in some markets. To be clear, a higher base effect also played a role in exaggerating the year-on-year export decline in December. December 2021 saw the second highest exports (valued at $39.3 billion) in 2021-22, when India’s goods shipments crossed a record $422 billion. The dynamics of world trade have changed since then, as momentum falters from a strong post-pandemic rebound to a growth trajectory amid rising inflation and geopolitical turmoil, with the Ukraine-Russia conflict one of the many setbacks. counted as to the global economy through 2022.
In the midst of these turbulent times, a month-by-month reading of export trends is perhaps a better way to assess the situation. For now, December export numbers, even if boosted by the last batches of pre-holiday festive shipments reaching their intended shores, hold up well on this front compared to early trade estimates for October and November . The other silver lining is that imports also contracted 3.5% in December, the first such instance since November 2020, though sequentially they remained flat at around $58.2 billion. For the first nine months of 2022-23, India’s merchandise exports are still 9.1% higher than a year ago, slightly lower than the 11.1% growth recorded till November 2022. The current quarter is so high that the full year may still end with a decrease in exports. In December itself, new export orders grew at the slowest pace in five months as companies in key export markets struggled, according to the S&P Global India Manufacturing Purchasing Managers’ Index. The latest figures for US retail sales indicated the sharpest decline in 12 months even as industrial production contracted, indicating that demand for finished goods or inputs is set to shrink further in India’s top export destination. Is. With the reopening of China, competition is expected to intensify even as demand eases. Some recent government moves such as fixing glitches in a duty exemption scheme for exports and lifting restrictions on iron ore shipments have helped, but more macro- and sharper micro-policy action is needed to keep the export engine blazing Needed.