Impact of slowdown on foreign trade

By Sushma Ramachandran

NEW DELHI, SEPT. 1. The country's foreign trade is already feeling the impact of the global economic slowdown with exports recording a downturn of nearly 2 per cent during the period from April to July. Exports during July alone have fallen by 1.76 per cent while the overall dip during the first four months of the current fiscal is 1.86 per cent compared to last year.

Imports have also fallen by 1.57 per cent. As a result, the trade gap remains slightly smaller than last year at $3.35 billion in April-July as against $3.36 billion at the same period in 2000- 01. This is the silver lining to the sluggishness in imports and exports, since a widening trade deficit adversely affects the country's balance of payments.

The other positive aspect of the trade data released today by the Commerce Ministry is that non-oil imports have shown a marginal increase of 0.58 per cent during April-July. This minimal level of increase may not continue, however, since imports during July fell by over 2 per cent. A reduction in non-oil imports reflects the slowdown in the domestic economy with overall industrial performance having deteriorated considerably since last year.

In the case of oil imports, a decline of 6.2 per cent has been recorded over the period reflecting the stabilisation of international oil prices. This will come as a relief to the Finance Ministry after the ballooning of the oil import bill last year. The spurt in import costs had occurred due to prices suddenly hardening in world markets and had consequently put pressure on the balance of payments. Fortunately, non-oil imports were sluggish last year as well, as a result of which the trade deficit did not reach alarming proportions.

The Commerce Ministry data show that total exports during April- July this year are estimated at $13.6 billion compared to $13.8 billion over the same period last year. Exports during July are estimated at $3.4 billion as against $3.52 billion in the same month in 2000-01.

Total imports are valued at $16.9 billion as compared to $17.2 billion last year. Oil imports were estimated at $5.4 billion last year but have now fallen to $5.1 billion. Non-oil imports are valued at $11.8 billion as against $11.77 billion in April- July 2000-01.

Imports during July are estimated at $4.3 billion, 2.09 per cent lower than the level of $4.4 billion in July 2000.

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