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India’s merchandise exports to seven top trading partners contract
New Delhi: India’s merchandise exports to seven out of its 10 top trading partners – the US, the United Arab Emirates, China, Bangladesh, the UK, Saudi Arabia and Hong Kong – contracted year-on-year by 26%, 18%, 47
New Delhi: India’s merchandise exports to seven out of its 10 top trading partners – the US, the United Arab Emirates, China, Bangladesh, the UK, Saudi Arabia and Hong Kong – contracted year-on-year by 26%, 18%, 47.5%, 52.5%, 22%, 20% and 23.6%, respectively in October as their economies are slowing down due to massive global headwinds, two people familiar with the matter said, citing official data.
Indian exports to three of the top 10 destinations, however, have seen robust double-digit growth in October – Netherlands (22%), Singapore (25%) and Brazil (58%) -- highlighting the uneven impact of headwinds, they added requesting anonymity. The top 10 destinations accounted for about 47% of India’s total exports by value in October , and together saw over 21% fall from $17.72 billion in October 2021 to $13.92 billion in October 2022.
Total merchandise exports declined 16.65% to $29.78 billion.
Commenting on the trade data for October on Tuesday, commerce secretary Sunil Barthwal said that even the World Trade Organisation (WTO) has projected a deceleration in global trade -- 3.5% in the current calendar year and 1% in 2023. As India’s share in global merchandise trade is only 1.8% and 4% in global services, there is actually an opportunity to increase India’s share in global trade, he added.
WTO in the first week of October this year cited various reasons for different countries facing a slump in demand. “Import demand is expected to soften as growth slows in major economies for different reasons. In Europe, high energy prices stemming from the Russia-Ukraine war will squeeze household spending and raise manufacturing costs. In the United States, monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment. China continues to grapple with Covid-19 outbreaks and production disruptions paired with weak external demand,” it said.
India’s imports in October rose by about 5.68% to $56.69 billion on sustained domestic demand for inputs and intermediaries. The country’ overall exports (merchandise and services, combined) in the first seven months of the current financial year, however, jumped 19.56% on an annualised basis to $444.74 billion.
An economic analysis on Tuesday by the securities house Nomura said the trade slump in October “warns of” impending growth headwinds. Nomura analysts Sonal Varma and Aurodeep Nandi said in the report: “The global slowdown is upon us.”
“October marks the first contraction in exports in the post-pandemic phase – the last time exports contracted was back in February 2021 – attesting to the increasingly challenging global environment, and India’s sensitivity to this global slump. We had flagged back in July that our base case is a recession in 2023 in most developed economies, which will continue to weigh on India’s exports, in line with the deepening downturn signalled by Nomura’s leading index for Asian exports,” they added.
November’s exports are likely to improve on account of more working days this year, the report said, citing fewer working days this October due to the Diwali holidays. Merchandise exports in September saw a 4.8% growth over the previous year.
