New Delhi: India’s export growth slowed in August as shipments of clothing, steel and electronic goods eased amid a weakening global economy.
Overseas shipments, which account for about 15% of the economy, rose 27% to $16 billion (Rs75,200 crore) from a year earlier, after gaining 31.2% in July, the government said in a statement on Wednesday. Imports increased 51% to $29.9 billion, widening the trade deficit to a record $13.9 billion.
Sales overseas are slowing as the deepening global financial crisis crimps spending by customers in Europe and the US, Asia’s biggest overseas markets. Flagging exports may force companies in India to cut production, damping an expansion forecast by the Reserve Bank of India (RBI) to fall to a four-year low this year.
“Overseas sales will continue to face headwinds as the credit market crisis in the US deepens further, squeezing demand for Indian goods,” said N.R. Bhanumurthy, an economist at the Institute for Economic Growth in New Delhi.
Troubled times: Sales overseas are slowing as the deepening global financial crisis crimps spending by customers in Europe and the US. Ashesh Shah / Mint
China’s export growth slowed in August to 21.1%, compared with a 26.9% gain in July. Japan’s exports grew 0.3% in August after rising 8% in the previous month.
Recessions in the world’s main economies will compromise India’s exports, Prime Minister Manmohan Singh said on Tuesday, according to an interview with the French newspaper ‘Le Figaro’.
Exports in the five months ended 31 August rose 35% from a year earlier to $81.2 billion, Wednesday’s report showed. Imports rose 38% to $130.4 billion. That brings the trade deficit to $49.2 billion, compared with $34.5 billion in the same period a year earlier.
The US share of India’s total exports declined to 13% in the 12 months to March, compared with 15% a year earlier, according to the latest breakdown of overseas sales from RBI.
In the same period, shipments to Asian countries increased to 42.3%, compared with 39.5%, according to RBI. India gives a more detailed analysis of exports five to six months after the initial data.