Global headwinds impede export to 7 trading partners
2 min read 17 Nov 2022, 12:51 AM ISTHowever, exports to the Netherlands, Singapore, and Brazil saw growth from the year earlierIndia’s total mercantile exports fell 16.65% from the year-ago to $29.78 billion in October
PremiumNEW DELHI : Merchandise exports to seven out of India’s top 10 trading partners declined sharply from a year ago in October due to a significant slowdown in economic activity globally, two people, citing the preliminary data released by the government, said.
Merchandise exports to the US, United Arab Emirates, China, Bangladesh, UK, Saudi Arabia and Hong Kong contracted year-on-year by 26%, 18%, 47.5%, 52.5%, 22%, 20% and 23.6%, respectively, in October 2022 due to the impact of massive global headwinds, they added.
However, exports to the Netherlands grew by 22%, Singapore by 25%, and Brazil by 58% over the year ago. It shows that the impact of the economic meltdown is uneven, they said, seeking anonymity.
India’s total mercantile exports fell 16.65% from the year-ago to $29.78 billion in October. Exports to the top 10 destinations, which account for 47% of the total exports by value, fell 21% from $17.72 billion in October 2021 to $13.92 billion last month.
Even the World Trade Organization (WTO) projected deceleration in global trade by 3.5% in 2022 and 1% in 2023, Union commerce secretary Sunil Barthwal said. However, considering that India’s share in global merchandise trade and services is only 1.8% and 4%, respectively, there are lots of opportunities to increase our share, he added.
In early October, WTO said several factors were at play for the demand slump affecting different countries. According to WTO, import demand is expected to soften as growth slows across major economies. In Europe, high energy prices due to the Russia-Ukraine war will squeeze household spending and raise manufacturing costs. In the US, monetary policy tightening will hit interest-sensitive spending on motor vehicles, fixed investment and housing. “China continues to grapple with covid outbreaks and production disruptions paired with weak external demand," it added.
Meanwhile, imports rose 5.68% in October to $56.69 billion on sustained domestic demand for inputs and intermediaries. However, India’s exports (merchandise and services) in the first seven months of FY23 rose 19.56% from a year ago to $444.74 billion.
While advanced economies are facing an economic slowdown, India has been a bright spot and one of the fastest-growing economies. However, while India’s share in global trade is not significant, a slowdown in major economies will impact its export performance. Therefore, our strategy is to focus on regions with robust demand, such as North America, Latin America, West Asian and North African countries, said Barthwal, citing a WTO report.
Experts said while exports may suffer in the near term, domestic demand is expected to drive the economy.
According to Saket Patawari, executive director of consultant Nexdigm Pvt. Ltd, India’s strength as a reliable supplier of goods and services will continue to have promising outcomes in the second half of 2022-23.
According to Nomura analysts, the trade slump in October “warns of" the impending growth headwinds. “The global slowdown is upon us, " Nomura analysts Sonal Varma and Aurodeep Nandi said in a report on 15 November.
“October marks the first contraction in exports in the post-pandemic phase—the last time exports contracted was back in February 2021—attesting to the increasingly challenging global environment and India’s sensitivity to this global slump," they added.
However, exports for November are likely to improve on account of more working days, it further said.
