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Goods exports drop 3.5% in September but trade deficit eases a tad

In a late-night release on Monday, the commerce ministry said imports inched up just about 5% in September to $59.4 billion, having accelerated at a scorching pace in earlier months of this fiscal that had led to elevated trade deficit

Goods exports drop 3.5% in September but trade deficit eases a tad
Importantly, with global commodity prices moderating, export value will remain under pressure in the coming months

Merchandise exports dropped 3.5% in September from a year before to $32.6 billion, the first such drop this fiscal, mirroring a demand slowdown in advanced markets such as the US and the EU. However, trade deficit still eased to $26.7 billion in August from $28.7 billion in the previous month, as imports rose at a slower pace.

In a late-night release on Monday, the commerce ministry said imports inched up just about 5% in September to $59.4 billion, having accelerated at a scorching pace in earlier months of this fiscal that had led to elevated trade deficit.

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According to the preliminary data released by the ministry, exports in the first half of this fiscal touched $229.1 billion, up from $198.3 billion a year before. Meanwhile, imports in the first half widened to $378.5 billion from $274.5 billion a year earlier.

Meanwhile, high trade deficit will continue to pressure the current account deficit (CAD), which had hit a 15-quarter high in the June quarter. Official sources, however, stressed the government has adequate heft to finance the CAD.

Also Read: Prices of wheat & rice fall, flour prices stable: Food Ministry | The Financial Express

Importantly, with global commodity prices moderating, export value will remain under pressure in the coming months. This will add to the woes of a demand slowdown in the US, EU, China and the UK. However, domestic exporters are pinning hopes on the diversion of a portion of western orders away from China, whose ability to ship out is somewhat undermined by the fresh Covid outbreak there. Although imports still remain elevated, the pace of growth is slowing—from 43.6% in July to 37.3% in August to just about 5% now. It suggests pent-up domestic demand, responsible for a spurt in purchases in the aftermath of the Omicron onslaught, is probably losing steam, analysts have said.

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