New Delhi: India’s merchandise exports continued to contract in April this year for the seventh month in a row, possibly indicating the continued impact of the global slowdown on the country’s exporters.
So-called quick estimates from the ministry of commerce and industry show that exports contracted to $11 billion (Rs54,670 crore) in April, down by 23.6% compared with a year ago.
The updated figures will be released on 1 June.
After growing by 30.9% in the first half of 2008-09, India’s exports entered the negative territory and plunged 33.3% in March this year, the worst in at least 14 years. In dollar terms, exports stood at $11.5 billion in March.
India’s merchandise exports for the year ended March touched $168.7 billion, recording a 3.4% growth and falling short of the government’s revised target of $175 billion. Commerce secretary G.K. Pillai has said he expects a flat or modest contraction in merchandise exports growth in 2009-10.
Exports has shown an absolute month-on-month decline since July last year till April this year—from $16.9 billion to $11 billion.
Provisional data from the commerce and industry ministry shows that imports contracted, for the fourth successive month, to $15 billion in April, by 37.5% compared with a year ago on account of weak domestic demand and lower crude oil prices. In 2008-09, imports grew 14.3% to touch $287.7 billion.
The Federation of Indian Export Organization expects the country’s exports to touch $185 billion in 2009-10, a 10% growth over last year, on the back of recovery in external demand from July due to depleting inventories in Europe.
However, HDFC Bank Ltd chief economist Abheek Barua thinks a recovery could take more time.
“Destocking is happening since late January this year. However, with the kind of economic slowdown that Europe and US have seen, it will have a lingering impact on export demand,” he added.
On the back of improved performance by the steel, cement and automobiles sectors, there is also an expectation in some quarters of an early economic recovery by the end of the year.
The ABN Amro Bank purchasing managers’ index based on a survey of 500 companies—which comes ahead of the official industrial production data—rose to 53.3 in April from March’s 49.5, climbing above the threshold of 50 that separates expansion from contraction.
Goldman Sachs in a report released on Monday said it expects recovery in economic activities in the second half of this fiscal year, led by a rise in domestic demand. “The positive surprise is coming from domestic activity data, excess liquidity in the system and a substantial easing of financial conditions,” it said.
However, an official at a leading private home loan lender, who spoke on condition of anonymity, said the company’s own data does not show any increase in domestic demand.
“Credit demand is still subdued. If there is any pick-up, our data in the household and corporate demand segment would show it up. We have not seen anything of that kind yet,” he added.
A senior government official, who didn’t want to be identified, said there are mixed signals in the economy. “We need to wait and watch for any clear direction.”
Barua said the talk of a recovery is actually a correction in the earlier extreme negative view about the economy. “We had swung too much in the negative direction with growth projections of 4-4.5% for 2009-10. We may still grow at 5.5-6% this year.”