India exported goods worth $34.48 billion in December 2022, constituting a 7.75% rise from November’s $32 billion figure but a steep 12.2% dip from a year ago, amid slowing global demand. Imports also contracted 3.5% to $58.2 billion from $60.33 billion a year ago.
This is the second time in three months that the value of outbound merchandise shipments has tanked year-on-year. In October 2022, goods exports had dropped 16.7% to slip below the $30 billion mark for the first time in 21 months, and risen a mere 0.6% in November.
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Consequently, the country’s merchandise trade deficit inched up from just under $24 billion in November to $24.24 billion in December, remaining under the $25 billion mark for the second month in a row after five months of $25 billion plus deficits, including the record $30 billion deficit in July 2022.
Stressing that the ‘high base effect’ from December 2021 was at work too, the Commerce and Industry Ministry pointed out that merchandise exports stood at $39.27 billion that month which had marked the second highest monthly merchandise and services exports during 2021-22.
‘Export orders contracting’
“Global growth forecasts indicate downturn in global economic activity and trade. As per Global Composite Purchasing Managers’ Index report (January 2023), new export orders have been contracting for the tenth successive month in December,” the Ministry said in a statement.
“The sequential improvement in exports due to pre-holiday shipments was not enough to stave off a year-on-year contraction in December,” said Aditi Nayar, chief economist at ICRA. But softer prices of some commodities have helped rein in imports somewhat and stabilised the trade deficit, she noted.
“We believe the current account deficit has likely peaked in the second quarter of 2022-23, and foresee a moderation to $25-29 billion each in the subsequent two quarters,” Ms. Nayar reckoned.
Despite a dip in two months, merchandise exports in the first nine months of 2022-23 are still 9.1% higher than a year ago at $332.76 billion. Goods imports, on the other hand, are up 25% at $551.7 billion.
Shipments from as many as 19 of 30 major exporting sectors shrank in December, including cotton yarn and handlooms (-40.4%), handicrafts (-36.9%), petroleum products (-26.9%), plastic and linoleum (-26.23%), gems and jewellery (-15.2%).
Engineering goods exports, the mainstay of India’s exports in recent years, dropped nearly 12% from $10.3 billion a year ago to little over $9 billion in December 2022. Overall engineering exports are down 3% so far in 2022-23 following six consecutive months of contraction.
Readymade garments
Exports from the employment-intensive readymade garments (RMG) sectors grew a mere 1.02% in December and the Ministry attributed the woes of the textiles sector, especially cotton yarn ‘to the continuous price rise of raw materials throughout 2022’. “Exports of Indian textile apparels and RMG textiles got a major hit due to recessionary trend in major economies,” it said.
“Given the cumulative growth until December 2022 and the indicators of the slowdown in global economic activity, there is cautious optimism on international trade in the last quarter of the current financial year,” the Ministry said.
Published - January 16, 2023 05:53 pm IST
