Exports are expected to face headwinds from anticipated slowdown in global growth, largely premised on lower growth in advanced economies, such as the United States and the euro area — both key export markets for India. Further, deceleration in domestic growth could lead to some softening in imports.
India’s readymade garment and raw textile exports were down by 12.1 per cent and 17.5 per cent respectively in February this year. Exports are expected to face headwinds from anticipated slowdown in global growth, largely premised on lower growth in advanced economies. Deceleration in domestic growth could lead to some softening in imports, CRISIL said.
India’s merchandise exports fell by 8.8 per cent year on year (YoY) to $33.9 billion and core (non-oil, non-gold) exports fell by 6.4 per cent YoY in February this year. A large part of the decline was because of oil exports plunging 28.6 per cent YoY, which was also the first annual decline since February 2021.
As there appears to be a shift from goods towards services demand, which is less import intensive, the goods export slowdown will continue and could intensify as the impact of monetary policy tightening gathers pace, CRISIL observed.
Meanwhile, merchandise imports fell by a slightly lesser 8.2 per cent YoY to $51.3 billion in the month. In fact, core imports shrank at a much smaller rate of 2 per cent, indicating that domestic economic activity is still showing resilience.
As a result of the sharper decline in overall exports vis-à-vis overall imports, India’s merchandise trade deficit widened marginally to $17.4 billion in February from $16.6 billion in January 2023.
Nevertheless, merchandise trade deficit remains on the decline as softening international commodity prices help reduce India’s import bill, CRISIL added.
Fibre2Fashion News Desk (DS)