New Delhi: Merchandize exports fell for the fifth straight month in September as global demand stayed weak, widening the trade deficit further, according to data released on Thursday.
Exports contracted 10.8% to $23.7 billion from the year earlier. Imports rose for the first time in four months, by 5.09% to $41.8 billion. The trade deficit swelled to $18.1 billion from $15.7 billion in August, the commerce department said.
“The contraction in global demand and deceleration in manufacturing are primary reasons for decline in exports,” Federation of Indian Export Organisations (FIEO) president Rafeeque Ahmed said. The markets in the US, Europe and Japan are still not showing healthy growth, Ahmed added. However, the situation may improve in the second half of the fiscal, he said.
The surge in imports was led mainly by oil, which rose 30.7% to touch $14.1 billion, while non-oil imports continued to decline, dropping 4.46% to $27.7 billion.
“The increase in oil import numbers could be an effect of price,” he said. Indian refineries could also be importing oil to export later, which would reflect in export numbers in a couple of months, he said.
As far as non-oil imports are concerned, the data on gold need to be examined closely to gauge people’s expectations on inflationary pressures.
While unveiling trade data for August, commerce secretary S.R. Rao had said thatthe numbers provided a “slight ray of hope” after a dramatic 14.8% shrinkage in exports in July. “I hope this will give us some confidence that we can make up,” Rao had said, adding that some sectors such as pharmaceuticals, engineering and textiles were showing some sign of improvement.
For the April-September period, exports dipped 6.79% to $143.6 billion from $154.1 billion in the same period last year while imports decreased by 4.36% to $ 232.9 billion.
“These numbers are quite worrisome,” said Shubhada Rao, chief economist at Yes Bank Ltd in Mumbai. “It’s not good for the rupee and I expect these numbers will have a short-term impact on the currency.”
Apparel Export Promotion Council (AEPC) chairman A. Sakthivel said the rising cost of fuel and inflation are hurting exports. Despite the recent spate of policy changes, India still risks a ratings downgrade, international rating agency Standard and Poor’s said on Wednesday. However, India doesn’t face an immediate or serious threat of a credit rating downgrade, finance minister P. Chidambaram said at a G-24 briefing in Tokyo on Thursday.
Bloomberg and PTI contributed to this story