India’s exports drop 12.2% in December
It is now clear how a developing recession in the west is affecting India’s overseas commerce. Due to a downturn in demand from important markets following aggressive rate hikes by major central banks and an unfavourable base, merchandise exports decreased 12.2% from a year earlier to $34.5 billion in December 2022, the second decline in three months. In October, exports of goods had decreased by 16.65% on a yearly basis; however, November saw a flat growth.
India’s exports drop 12.2% in December: Key Points
- In December, imports decreased as well, though more slowly, by 3.5% to $58.2 billion, which was a result of the recent slowdown in domestic goods demand.
- Additionally, the value of imports and exports has been impacted by the decline in global commodity prices.
- The trade deficit increased from $22.6 billion to over $23.8 billion in December as a result of higher imports, while it was still well below the record $30 billion imbalance reached in July.
- In the September quarter, India’s current account deficit (CAD) increased to $36.4 billion, an all-time high in absolute terms and 4.4% of GDP, mostly due to a record deficit of $83.5 billion.
- On a balance of payments (BoP) basis, there was a significant decrease in foreign exchange reserves of $30.4 billion in the quarter, as opposed to additions of $4.6 billion in Q1FY23 and $31.2 billion in Q2FY22.
India’s exports drop 12.2% in December: CAD peaked in Q2FY23
According to analysts, the CAD may have peaked in Q2FY23, but it may still be at high levels, even if the prospect of capital outflows is expected to have a greater impact on the rupee’s exchange rate.
Up to 19 of the 30 major industries had a fall from the previous year, including petroleum products, engineering products, gems and jewellery, textiles and apparel, medications, and pharmaceuticals. But when compared month to month (without accounting for seasonal variations), goods exports rose marginally by 7.7% in December.