Published on 16/03/2017 2:20:57 PM | Source: Religare Capital Markets Ltd

India Economics: Trade data - exports at 2-year high - RCML

Below is the views On India Economics: Trade data’ by Rahul Agrawal,Economy & Strategy,Religare Capital Markets Limited

Trade data – key takeaways:  

*India’s merchandise exports rose by 17.5% YoY to US$24.5bn in Feb’17 – this is the highest amount in any month in the last 2 years. Exports had risen by 4-5% YoY in the last 6 months. Non-oil exports were up by a sharp 16.5% YoY. Exports of most agri-commodities (rice, spices, oilseeds, marine products, etc.), chemicals, cotton & man-made yarns and plastic products were up by over 10% YoY. Engineering goods exports rose by a sharp 47.3% YoY – this is India’s largest export item.  

*Some green shoots are visible across global merchandise trade. Imports across the US, EU, China and Japan have picked-up since Nov’16 and posted an increase for 2-3 consecutive months – these point towards a pick-up in global demand. Sustainability is key. 


Imports across major economies are picking up

*India’s merchandise imports were up by a sharp 21.8% YoY to US$33.4bn in Feb’17. Growth was largely driven by oil and gold imports. Non-oil non-gold imports rose by just 4.8% in Feb’17, in line with the average growth seen during the last 3-4 months. Imports of electronic goods, the second largest imported item after crude oil, rose by 12.2% YoY. Capital goods imports (Machine tools, electrical & non-electrical machinery, Project goods, etc.) declined in February.  

*Oil trade rose sharply in Feb – oil exports/ imports were up by 47.3%/60% YoY. This was because oil prices averaged ~70% higher during Jan-Feb’17, owing to a low base effect (prices had touched record lows of ~US$30/bbl in Jan-Feb’16). Gold imports more-than-doubled to US$3.5bn in Feb’17 from US$1.4bn in the year ago month.  

*The merchandise trade deficit shot up by 35.3% YoY to US$ 8.9bn in Feb’17. The deficit has risen by 17% YoY on an average in the last 5 months, after declining continuously between Jan’16-Sep’16.  

*During Apr’16-Feb’17, the merchandise trade deficit declined by 16.6% (or US$19bn) to US$ 95.2bn. The decline is entirely driven by a fall in the non-oil deficit – gold imports in particular have declined by 24.5% (US$7.5bn) and account for 40% of the fall in the merchandise trade deficit. The decline in the merchandise trade deficit is not expected to materialize into a significant improvement in the CAD – the gains will be offset by a decline in remittances and service export earnings. 


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