The rise in outward shipments of goods in May was the highest since February (11.9%), and was much above the subdued trend seen most of the recent months, but it was also due to a low base (-10.4%)
India’s merchandise exports grew 9.1% on year in May to $ 38.13 billion, but a sharp 28% rise in imports of petroleum crude and products pushed imports growth to 7.7%, precipitating a trade deficit of $23.78 billion, the highest since October last year, official data released on Friday showed.
The rise in outward shipments of goods in May was the highest since February (11.9%), and was much above the subdued trend seen most of the recent months, but it was also due to a low base (-10.4%)
Commerce Secretary Sunil Barthwal, however, attributed the high deficit to economic growth. “When your economy is growing faster than the world, there will be higher demand for imports and you will have less exportable surplus,” he said.
The merchandise trade deficit during May was closely comparable to that in year-ago month ($22.5 billion) even though the imports of petroleum went up by $ 4.4 billion in value terms, officials cited. In April the deficit stood at $ 19.1 billion while exports had grown just 1%.
“With the merchandise trade deficit enlarging by $ 6 billion in April-May 2024 relative to the year-ago months, we expect the current account deficit to rise to 1.5% of GDP in this quarter from 1.1% of GDP in Q1 FY2024,” chief economist at ICRA Aditi Nayar said.
Merchandise imports were recorded at $ 61.91 billion. Besides petroleum, which is the biggest item of import, electronic goods also saw considerable jump in imports during the month.
Barthwal attributed the export performance in May to the return in demand from the developed countries as they got inflation under control and saw rise in purchasing power. “This positive trend, we foresee, will continue. That is also the prediction of the World Trade Organisation (WTO) for 2024 of positive trade growth prediction as compared to last year when it was negative growth.”
According to the WTO world merchandise trade will increase by 2.6% this year after falling 1.2% in 2023.
Within exports, the biggest contributors to growth were petroleum products, engineering goods, electronic goods and drugs and pharmaceuticals. Petroleum exports during May stood at $ 6.7 billion, up 15.7% on year, engineering exports were $ 9.9 billion, up 7.4% on year. Electronics exports during the month grew 23% to $ 2.9 billion, pharma exports were up 10.4% to $ 2.3 billion while exports of readymade garments expanded 9.8% to $ 1.3 billion.
Top five export destinations, in terms of change in value, exhibiting positive growth in May 2024 were US (13.06%), Netherland (43.92%), UAE (19.43%), Malaysia (86.95%) and U K (33.54%). Top 5 import sources, in terms of change in value, during the month were UAE (49.93%), Iraq (58.68%), Russia (18.02%), Angola (1274.95%) and Indonesia (23.36%).
For April-May goods exports grew 5.1% to $ 73.12 billion while imports were up 8.8%to $116 billion.
Services exports in May grew 11.7% to $ 30.16 billion while imports were up 8.8% to $17.2 billion. Services exports for April-May were up 14.6% to $ 60.5 billion and imports were $ 13.6% to $33.9 billion.
Source:financialexpress.com