Rise in domestic demand: Exports rises 50% in July, imports surge 63%

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August 14, 2021 4:45 AM

Of course, as analysts have pointed out, export growth had remained subdued even before the pandemic – outbound shipments rose about 9% in 2018-19 but again shrank by 5% in 2019-20. So only a sustained uptick over the next few years would help India recapture the lost heights.

Similarly, core imports rose 45% year-on-year and marginally from the level witnessed in July 2019. Brent crude oil prices jumped 74% in July from a year earlier.Similarly, core imports rose 45% year-on-year and marginally from the level witnessed in July 2019. Brent crude oil prices jumped 74% in July from a year earlier.

Merchandise exports surged 50% in July from a year before and 35% from the pre-pandemic level (July 2019), as orders from key western markets poured in and global commodity prices remained elevated. Imports, too, shot up by 63% from a year before and 15% from the same month in 2019, mirroring a gradual rise in domestic demand, showed the provisional data released by the commerce ministry on Friday.

With this, exports have exceeded the pre-pandemic level (same months in 2019) for five months in a row, suggesting a resurgence in external demand after a Covid-induced slide last fiscal.

Exports in July stood at $35.4 billion, while imports stood at $46.4 billion. Thanks to elevated imports, trade deficit hit a three-month high of $11 billion.

Outbound shipments in the first four months of this fiscal rose to $130.8 billion, recording a jump of 75% year on year and 22% from the same period in 2019. The impressive growth so far has raised hopes that the country will achieve the ambitious export target of $400 billion for FY22. Already, almost 33% of the annual target has been met in the first four months. Last fiscal, the country could ship out goods worth only $291 billion due to the Covid outbreak.

Of course, as analysts have pointed out, export growth had remained subdued even before the pandemic – outbound shipments rose about 9% in 2018-19 but again shrank by 5% in 2019-20. So only a sustained uptick over the next few years would help India recapture the lost heights.

Thanks to a rise in global crude oil prices and resurgence in gems and jewellery exports after last year’s setback, core exports (excluding petroleum and gems & jewellery) climbed up by 28% in July from a year before, lower than the 50% growth in overall merchandise exports. Still, given the pandemic, the growth remains encouraging. Also, core exports in July were 32% higher than the July 2019 level.

Similarly, core imports rose 45% year-on-year and marginally from the level witnessed in July 2019. Brent crude oil prices jumped 74% in July from a year earlier.

Overall, goods imports in the April-July period stood at $172.6 billion, up 94% from a year before but only 1% from the same period in 2019.

Data showed that exports of petroleum products jumped by 231%, gems & jewellery 131%, cotton yarn, fabrics, made-ups and handloom products 48%, marine products 48%, electronics 48% and engineering goods 43%.

Similarly, imports of pearls, precious and semi-precious stones climbed by 179%, followed by gold (136%) and petroleum (97%).

According to Icra chief economist Aditi Nayar, thanks to a robust services trade surplus in June 2021, in addition to the state lockdown-compressed merchandise trade deficit, current account may show a surplus of $2-3 billion in the first quarter. “Overall, we expect the current account deficit to be limited to $20-25 billion or 0.7% of GDP in FY22.”

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