India's trade momentum will continue, says CRISIL noting merchandise, services growth figures for April-May
Jun 19, 2024
New Delhi [India], June 19 : India's merchandise exports surged more than 9.1 per cent in May to USD 38.1 billion, compared to last year during the same month, highlights a report by Crisil.
The report noted that the country also experienced a modest 1.1 per cent growth in exports compared to April. This growth was driven by both oil and non-oil exports. The report said that India's export performance aligns with the World Trade Organization's latest global trade outlook, which predicts a recovery in global goods trade volume this year.
India's top export destinations, including the US, Europe, and the UAE, showed improvements. However, the report also highlighted that the higher prices of global commodities, both energy and non-energy, could partly explain the increase in export values in US dollar terms.
Similar to exports, India's imports also rose by 7.7 per cent to USD 61.2 billion in May, marking the highest import value in the past seven months. The increase in imports was mainly due to oil and core imports, which exclude oil and gold.
Interestingly, oil import value increased in May compared to April, despite lower crude oil prices (USD 82 per barrel in May versus USD 90.1 per barrel in April). This suggests that India imported higher volumes of oil.
Crisil noted that India's trade deficit also widened to USD 23.8 billion in May from USD 19.1 billion in April. In May last year, the trade deficit was USD 22.5 billion.
Additionally, India's services imports grew by 19.1 per cent to USD 16.6 billion in April. However, services exports have been steady at approximately USD 30 billion over the past three months, which means the services trade surplus remains strong.
Looking ahead on India's trade, Crisil commented that the fiscal year has started positively, with merchandise exports showing growth in the first two months. The recent strong export momentum and optimistic trade growth forecasts from major international organizations are encouraging.
The government's focus on foreign trade agreements (FTAs) is also expected to support this growth. However, import growth has outpaced export growth, increasing the trade deficit. This will be closely watched, especially since the US has announced tariff hikes on Chinese imports, which might lead to an influx of Chinese goods into the larger Asian market, including India.
