Exports dip 4.16% in May on slowdown, manufacturing woes
India’s exports contracted (-) 4.16% in May to $25.68 billion, hit by a demand slump as orders dry out from Europe that has been hit by sovereign debt worries and a wobbly political situation. HT reports.business Updated: Jul 03, 2012 00:28 IST
India’s exports contracted (-) 4.16% in May to $25.68 billion, hit by a demand slump as orders dry out from Europe that has been hit by sovereign debt worries and a wobbly political situation.
Shrinking shipment orders have implied that exporters haven’t been able reap the benefits of weakening rupee that has slid to record lows. A persistently weak rupee, however, has made imports costlier widening the trade and current account deficit — a worrying sign for an economy that is slowing.
Imports fell by a sharper (-) 7.36% to$41.9 billion during the month. Imports of plants and machinery fell by 8% mirroring weakening investment activity as companies, squeezed by high borrowing and input costs, defer capacity expansion plans.
India’s economic growth crashed to 6.5% in 2011-12, and 5.3% during January to March this year, the worst in nine years.
Gross fixed capital formation (GFCF), a measure of investment activity, has fallen to a four-year low of 28.6% of GDP during January-March 2011-12.
“The decline in exports is mainly due to the global slowdown and deceleration in domestic manufacturing. Many countries are facing huge setback in exports and India is no exception to it,” Federation of Indian Export Organisations (FIEO) president Rafeeque Ahmed said.
Petroleum products, (-26%), engineering goods (-15.7%), readymade garments (-15.8%) and gems and jewellery (-9%) clocked the worst contraction in orders in May.
Oil imports grew by 14.02% to $14.98 billion in May. Cumulative value of oil imports in April and May was $28.89 billion, 10.51% higher than the oil imports bill of $26.14 billion registered during the corresponding period last year.