World Economy

India Exports Contract for Sixth Month

India Exports Contract for Sixth MonthIndia Exports Contract for Sixth Month

India’s exports fell for a sixth straight month, the longest losing streak since 2009, weakening the rupee and boosting pressure on Prime Minister Narendra Modi to spur demand in Asia’s third-largest economy.

India exported $22.34 billion worth of goods in May versus $22.05 billion month-on-month. India’s exports in the year-ago period stood at $27.99 billion, which is 20.19% lower in dollar terms and 14.14% lower in rupee terms, CNBC reported.

Imports during the same period came in at $32.75 billion against $33.05 billion month-on-month.

India’s trade deficit for the month of May came in at a three-month low at $10.41 billion, marginally lower than $10.99 in April.

Imports for the month too came in at a three-month low. Soumya Kanti Ghosh, chief economic advisor to the State Bank of India, says the trade deficit number is on expected lines.

He was expecting a bump down after April’s data when gold imports were rather high. India imported $2.42 billion worth gold in May against $3.13 billion in the previous month.

“Export data continues to be at a low level and this trend may continue for some time, which is worrying as it will spill on to the  Indian Institute of Packaging number,” he told CNBC-TV18.

Crude oil imports for the period stood at $8.54 billion versus $7.44 billion month-on-month, while non-oil imports came in at $24.2 billion against $25.6 billion in April.

 Siddhartha Sanyal, chief India economist, Barclays, says both imports and exports are staying low and prices have a role to play in this. Weak exports is a concern despite weak rupee, he says.

However, Sanyal says, despite exports and imports being sluggish, overall trade deficit and current account deficit are not a cause for concern.

A weakening rupee and an acceleration in inflation indicates room is decreasing for Reserve Bank of India governor Raghuram Rajan to lower interest rates further.

The rupee touched the day’s low soon after the data. The currency has weakened 2.1% over the past three months, the fourth-worst performance among 24 emerging market currencies tracked by Bloomberg.