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.

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.

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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.

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.