Shipments from India contracted for the second month in a row in November, after growing positively for only one month in September as the second wave of the coronavirus pandemic affected consumer demand in India’s largest markets in Europe. .
Exports fell 8.7%, while imports contracted 13.3%, resulting in a high trade deficit of $ 10.9 billion over 10 months, according to revised trade data released by the Ministry of Commerce.
China’s exports, on the other hand, grew by 21.1% in November, the fastest growth since February 2018, while imports grew by 4.5%, leading to a record trade surplus of $ 75.4 billion.
The main export items in India that decreased growth include petroleum products (-59.7%), engineering products (-8.1%), chemicals (-8.1%), ready-made garments (-1 , 2%) while pharmaceuticals (11.1%), precious stones and jewelry (4.1%), electronics (1%) registered a positive increase. Products that led to imports and the trade deficit include non-ferrous metals (9.1%), chemicals (36.1%), electronics (12.3%), fertilizers (29.3%) and gold (2.7%). ).
Aditi Nayar, chief economist at ICRA Ltd, said the slowdown in non-oil exports was driven by renewed restrictions on trading partners, which outpaced optimism about the early availability of Covid-19 vaccines. “This trend could continue in the winter months, before an upward trend takes root in the fourth quarter of fiscal year 21. ICRA expects the size of the trade deficit in goods to almost double in Q3 FY21 from Q2 FY21, with imports recovering “It is due to an improvement in economic activity, an increase in commodity prices and an increase in the demand for gold during the festivity and the wedding season,” she added.
Nayar added that he expects the current account surplus to fall substantially in Q3 FY2021 and Q4 FY2021 from his $ 19.8 billion level in Q2 as the domestic recovery strengthens. “Overall, ICRA expects India’s current account balance to be in considerable surplus of $ 35-40 billion or about 1.5% of GDP in fiscal year 21, as opposed to the $ 25 billion deficit or 0.9%. of GDP in fiscal year 20, “she added.
India’s trade in goods weakened just before the covid-19 pandemic affected the economy and external demand. In 15 of the last 17 months since June 2019, the country’s exports have been negative. However, starting in March this year, both exports and imports began to fall by two figures, even temporarily leading to a trade surplus in June, for the first time in 18 years.
Data compiled by the World Trade Organization (WTO) showed that global trade in goods fell by 21% in the June quarter. The WTO now expects world trade in goods to fall by 9.2% in 2020, followed by a 7.2% increase in 2021. In April, the trade body projected that global trade in goods will fall by 13% to 32% in 2020 due to the pandemic.
The pace of contraction in the Indian economy slowed to 7.5% in the September quarter, from a historic contraction of 23.9% in the June quarter. Since then, many economic agents have revised their growth forecasts for India. The Asian Development Bank has projected the Indian economy to contract at an 8% slower pace than its previous estimate of 9% in fiscal year 21, amid a faster recovery in Asia’s third-largest economy. The Reserve Bank of India (RBI) projected the Indian economy to shrink by 7.5% in fiscal year 21 earlier this month, a contraction of less than 9.5% it had projected just two months ago, on behind a series of lead indicators, suggesting a sustained economic recovery.