Goods Exports Decline 6.9% Year-On-Year in August Due to Weak External Demand: Report

India’s merchandise exports continued to decline for the seventh consecutive month in August, dropping by 6.9% year-on-year to $34.48 billion due to weak external demand, Business Standard reported on Friday, September 15, citing data from the commerce department.

The business daily added that the government, however, expressed optimism, saying that exports were ‘stabilising’ and ‘greenshoots’ were clearly visible.

On the other hand, the merchandise trade deficit, or the gap between exports and imports, reached a 10-month high of $24.16 billion in August. This was driven by higher crude oil prices and robust domestic demand, leading to an almost 11% jump in imports compared to the previous month.

Imports were recorded at $58.64 billion last month, down 5.2% year-on-year.

According to the newspaper, commerce secretary Sunil Barthwal attributed some of the contraction to a high base from the previous year and falling commodity prices affecting export values, although export volumes remained positive.

‘Pessimism is turning into optimism now as greenshoots are clearly visible. The industry said their export orders were better and they were also optimistic about export order books. This month (in August), at least last month’s (July’s) story is repeating. This means that there’s an improvement in terms of the global exports scenario,’ Barthwal said in a media briefing.

TheHindu BusinessLinereported that the government is optimistic because half of the top 30 export items, including engineering, electronics, pharmaceuticals, and some agriculture goods, posted growth during the month.

Barthwal noted that firming oil prices might impact commodity prices, affecting exports in the future.

Aditi Nayar, chief economist at ICRA, told the business daily that with the monthly merchandise trade deficit prints averaging much higher during July-August vis-à-vis April-June 2023, India’s current account deficit is likely to widen in Q2FY24 from $10-12 billion expected in Q1FY24.