India's exports dip by 12.2% to $34.48 billion in December on weak global demands

India’s merchandise exports fell by 12.2 per cent to $34.48 billion in December 2022 as against $39.27 billion recorded in the corresponding month of the previous year due to weakening global demands amid recession fears in major economies.

As per data released by the Ministry of Commerce and Industry on Monday, India’s imports also declined during the last month of the 2022 calendar year leading to a marginal drop in the trade deficit.

Imports declined to $58.24 billion in December 2022 as compared to $60.33 billion recorded in December 2021, registering a year-on-year decline of 3.46 per cent.

The trade deficit narrowed to $23.76 billion in December, the lowest level in eight months. The merchandise trade deficit stood at $23.89 billion in November. The trade deficit has narrowed consistently this year due to softening in imports.

Weak global demand amid recession fears in the major economies of the world continues to weigh on India’s foreign trade. The majority of economists anticipate a global recession in 2023, as per a survey report released by the World Economic Forum in Davos on Monday.

Merchandise exports for the period April-December 2022 rose to $332.76 billion as against $305.04 billion recorded in the corresponding period of the previous year, posting a year-on-year growth of 9.08 per cent.

Cumulatively, merchandise imports have jumped to $551.70 billion in April-December 2022 period as against $441.50 billion recorded in the corresponding period of 2021, posting an increase of 24.96 per cent.

A sharp jump in imports, especially in the first quarter of the current financial year, has pushed the cumulative trade deficit for April-December 2022 to $218.94 billion as against $136.45 billion recorded in the corresponding period of the previous year.

“The resilient growth of the Indian economy during the first half of the current financial year, the fastest among major economies, bespeaks strengthening macroeconomic stability. However, global growth forecasts indicate a downturn in global economic activity and trade,” the ministry of commerce and industry noted in a statement.

As per the Global Composite PMI report (January 2023), new export orders contracted for the 10th consecutive month in December. The report also indicated that India and Ireland were the only nations to register a growth of economic activity in December 2022.

Engineering goods, which had been a bulwark for Indian exports post Covid, have taken a hit this year. After making a strong performance in FY2021-22, engineering goods exports have been faltering mainly due to weak demand from major advanced economies. The zero Covid policy followed by China also contributed significantly to the slowdown over the past several months, said EEPC India chairman Arun Kumar Garodia.

Engineering goods exports have recorded a year-on-year decline for the sixth straight month in December 2022. The government data shows that engineering goods exports fell nearly 12 per cent year-on-year to $9.08 billion in December 2022 as compared to $10.30 billion in the same month last year.

“Considering the gloomy world economic outlook for 2023, the global trade prospects are dim and its signs have been visible in the high-frequency numbers. In view of this, we see challenging times ahead for the engineering goods sector,” Garodia said.

India’s overall export (merchandise and services combined) fell by 5.26 per cent year-on-year to $61.82 billion in December 2022. Overall imports during the month under review dropped by 1.95 per cent to $73.80 billion.

For April-December 2022 period the overall exports reached $568.57 billion, registering a growth of 16.11 per cent year-on-year, while overall imports jumped to $686.70 billion in the first three-quarters of the current fiscal as compared to $546.95 billion recorded in the corresponding period of the last fiscal, posting year-on-year growth of 25.55 per cent.

“As India’s domestic demand has remained steady amidst the global slump, overall imports in April-December 2022 are estimated to exhibit a growth of 25.55 per cent over the same period last year,” the Ministry of Commerce and Industry noted in the statement.