India’s Merchandise Exports Contracted
India’s merchandise exports contracted for the 13th month in a row in December due to tepid global demand and a volatile global currency market, and the trade deficit widened due to a jump in import of non-essential items. Data released by the commerce ministry showed that during the month, exports contracted 14.75% to $22.3 billion, while imports shrank 3.9% to $33.9 billion, amounting to a trade deficit of $11.7 billion. In the same month, exports from China contracted 1.4%, performing much better than expected, possibly due to a depreciation of the yuan. India’s trade minister Nirmala Sitharaman last week flagged concerns that the depreciation of the Chinese currency may adversely impact India’s exports. India’s overall exports are projected by the commerce ministry to decline 13% from the previous year’s level to $270 billion in 2015-16, with a trade deficit of around $120-125 billion. The government’s earlier target of $900 billion in exports of goods and services by 2020, raising the country’s share in world exports to 3.5% from 2% now, looks more daunting. Non-oil imports picked up 7.63% in December, while oil imports contracted 33.2% due to falling crude oil prices.