Already, presenting a less gloomy picture, the World Trade Organisation this month expected global merchandise trade to fall by 9.2% in 2020 from last year, compared with the 12.9% drop projected in April.
Gold imports declined by nearly 53 per cent to USD 601.43 million in September.
Merchandise exports grew 6% year on year in September, the first rise since February, and a contraction in imports narrowed to 19.6% from 26% in the previous month, suggesting a gradual return towards normalcy.
Consequently, trade deficit narrowed to just $2.78 billion in September from $6.77 billion in the previous month, showed the quick estimate of the trade data released by the commerce ministry on Thursday.
Importantly, the outbound shipment of core products (goods excluding petroleum and gems & jewellery), which reflects the economy’s competitiveness, grew as much as 11.9% in September, against a 3.2% fall in August. The growth in core exports indicates a nascent recovery in external demand.
Exports in September rose to $27.58 billion from $26 billion a year before. Imports shrank to $30.31 billion last month from $37.69 billion a year earlier. As many as 22 of the 30 major product groups witnessed growth in September, a first in the current fiscal.
Earlier this month, the ministry had released a “preliminary estimate” of trade data, according to which merchandise exports had grown by 5.3%, year on year, in September.
Interestingly, core exports have accelerated at a quicker rate than that of overall merchandise exports month after month since May 2019, according to an FE analysis, based on the data from the Directorate General of Commercial Intelligence and Statistics.
Among the well-performing segments, exports of rice jumped by more than 94% year on year in September to $725 million, while those of drugs and pharmaceuticals surged by 24.4% to $2.24 billion, iron ore by 110% to $304 million. Engineering goods exports rose by 5.4% to $6.9 billion, while petroleum shipment rose 5% to $3.6 billion last month.
Analysts have said these are still early days, although the rebound in core exports in September points at a potential pick-up in external demand in the build-up to the crucial Christmas season, when orders from the key western markets—the US and the UK—flow in large volumes. Of course, some pent-up demand and despatches against orders firmed up before the pandemic may also have contributed to the decent rise. Nevertheless, these are encouraging signs, they concur.
Already, presenting a less gloomy picture, the World Trade Organisation this month expected global merchandise trade to fall by 9.2% in 2020 from last year, compared with the 12.9% drop projected in April. This will augur well for India’s trade as well.
Sharad Kumar Saraf, president of the exporters’ body FIEO, said the performance of the labour-intensive sector of exports, especially drugs & pharmaceuticals, engineering goods, RMG of all textiles, carpet, jute manufacturing, including floor covering, and handicrafts has been impressive; some of them have even witnessed a double-digit expansion. He said the growth in September shows “signs of revival, as gradual lifting of local lockdowns have further improved the business climate”. “Anti-China sentiments across the globe has also been one of the reasons for the improved performance in exports,” he added.
Mahesh Desai, chairman of the engineering goods exporters’ body EEPC, said the reversal of a slide in September is a matter of relief, but challenges to external trade continue due to the Covid-19 pandemic.
India’s exports had witnessed a record 61% crash in April in the wake of the lockdown, although the contraction subsequently narrowed to 12.7% in August.