Trade data for Jun-21 - Reinforces the path of normalisation for both exports and imports - Acuité Ratings

Suman Chowdhury, Chief Analytical Offiicer, Acuité Ratings & Research on the Trade data June-21

"The trade data for Jun-21 reinforces the path of normalization for both exports and imports with the decline in the intensity of the second Covid wave. It is clear, however that there hasn't been much disruption on the export front due to the state level lockdowns in Apr-May; rather the revival in the global economy and increased commodity prices have thrown open export opportunities. India's merchandise exports in Q1FY22 has been its highest ever in a quarter at USD 95.4 billion recording a growth of 18.0% over Q1FY20 (much higher against Q1FY21 due to the national lockdown). If one excludes petroleum and gems and jewellery exports, the growth in Q1FY22 vs Q1FY19 stands at 21.4% and is fairly broadbased in nature across product groups.

The data also indicates that non-oil and non-gold imports are getting back on track which is encouraging for the economy. Such imports grew by 11.4% in Jun-21 vs Jun-19 and for the first quarter as a whole, the growth over this 2 yr period stood at 4.8% despite the impact of the lockdowns in second Covid wave.

Overall, the merchandise trade deficit at USD 9.4 billion in Jun-21 is still lower than the normalised levels due to both lower quantum of crude oil imports and the unexpected export buoyancy. Clearly, the performance of the external sector has been better in Q1FY22 compared to the domestic demand given the disruption in the nascent growth momentum brought in by the highly intense Covid 2.0 wave. With the recovery in the domestic economy over the next few quarters, the average monthly trade deficit is expected to revert to the range of USD 11-12 billion."

Source : Equity Bulls

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