India’s Merchandise Exports rise 2.25 percent in July 2019

India’s merchandise exports grew 2.25 percent Y-o-Y in July 2019 to reach US$ 26.3 billion in a contrast to a decline of 9.71 percent Y-o-Y in June 2019. Electronic goods and pharmaceuticals helped the export to return in positive territory in July. Non-petroleum and non-gems and jewellery exports rose 5.3 percent Y-o-Y against a contraction of 4.9 percent in the previous month. Exports of high value items such as gems and jewellery declined by 6.7 percent and 5 percent Y-o-Y respectively. Moreover, exports of employment intensive leather products declined 3.7 percent Y-o-Y. To some extent, the depreciation of INR against US$ in the month of June and July provided impetus to the export gains.

Reflecting subdued domestic demand, merchandise imports dropped at faster rate of 10.43 percent Y-o-Y in July compared to 9.1 percent Y-o-Y decline in June. The decline was largely due to contraction in imports of gold (-42 percent), petroleum sector (-22 percent) and pearls, precious and semi-precious stones (-31 per cent).

Trade deficit shrank significantly to US$13.43 billion in July 2019 from US$18.63 billion in July 2018 as imports contracted to US$39.76 billion.

Given slowing domestic economy along with the global economy-both developed and emerging markets, amidst elevated trade tensions between China and the US, geo-political uncertainty, growth in exports and imports is likely to remain subdued in coming months.