Goods exports decline by 9% in Aug; trade deficit widens to $30 bn
- While goods exports in August this year totalled $34.71 billion compared to $38.28 billion in August 2023, goods imports stood at $64.36 billion compared to $62.30 billion in August last year.
Highlights:
- India's goods trade gap widened sharply to $30 billion in August 2024, reflecting a 9% decline in exports and a 3% rise in imports. This marks the largest trade deficit in ten months, attributed largely to weak demand in Western countries and other global challenges.
Trade Performance Overview:
- Decline in Exports: Goods exports in August 2024 fell to $34.71 billion, compared to $38.28 billion in August 2023, a 9% year-on-year decline.
- Rise in Imports: Goods imports increased to $64.36 billion, up from $62.30 billion in August 2023, leading to the sharp rise in the trade deficit.
- This has resulted in a $30 billion trade deficit, the highest in nine months.
Global Trade Challenges:
- The World Trade Organization (WTO) Goods Trade Barometer, which serves as an early indicator of merchandise trade volume, suggested a potential improvement in global trade during the second half of 2024.
- However, uncertainty remains due to shifting monetary policies in advanced economies and weakening export orders.
- Impact of Oil Prices: Commerce Secretary Sunil Barthwal noted that India’s petroleum exports have been hit due to lower oil prices caused by the slowdown in China. On the flip side, this has benefited imports.
- Sanctions on Russia: The procurement of rough diamonds, which are critical to India’s trade, has been impacted by sanctions on Russia.
Strategic Measures for Trade Improvement:
- The Indian government has implemented several measures to address the trade challenges:
- Diversifying Markets: India is looking to improve trade with African markets and reduce dependency on advanced countries, which are currently facing economic slowdowns.
- Logistics Improvement: The Ministry of Commerce and Industry is collaborating with the Ministry of Shipping to address logistical challenges, including container shortages.
Global Trade Outlook:
- According to the WTO, world merchandise trade volume picked up in the third quarter of 2024, with the Goods Trade Barometer standing at 103, above the baseline value of 100. The barometer's current reading suggests that trade has gained momentum following a period of stagnation at the end of 2022.
- Global Trade Growth: The first quarter of 2024 saw 1% growth compared to the previous quarter, and 1.4% year-on-year growth. This aligns with the WTO's earlier forecast of a 2.6% increase in world merchandise trade for 2024.
- Despite this momentum, the outlook remains uncertain due to ongoing global economic challenges, especially in advanced economies. The IMF also indicated that while Europe’s recovery is on track, inflation continues to be a concern, requiring cautious monetary policy adjustments.
Prelims Takeaways:
- World Trade Organization (WTO)