Dec exports grow 6.7%, but ‘difficult year’ ahead

Arun S. New Delhi | Updated on March 12, 2018


Imports rise 20%; trade deficit down

Exports in December 2011 grew by a modest 6.7 per cent over the previous year to $25 billion, mainly due to the weak demand in traditional destinations such as Europe and the US.

However, the performance was a shade better than November 2011, when the growth of shipments was just 3.87 per cent.

This climb has given hopes of a better performance in the last quarter as the effect of rupee depreciation, along with improved business and consumer confidence, kicks in. Month-on-month export growth this fiscal had shown a clear deceleration till November from a peak of 82 per cent in July.

On the other hand, imports during December 2011 recorded a 19.8 per cent growth to $37.8 billion taking the trade deficit to $12.8 billion for the month.

The rupee depreciation has made imports costlier in turn affecting the competitiveness of exports (many export items have a significant portion of imported inputs). There is a likelihood of a further slowdown in imports in the last quarter not only due to the poor demand for goods overseas but also the competitiveness of exports being hurt by domestic inflation and high interest rates as well.

This was reflected in the quarter-on-quarter analysis, where there has been a slowdown in the growth of oil and non-oil imports in the third quarter this fiscal.


Also, the trade deficit (gap between exports and imports) has fallen for the second consecutive month in December, after the trade gap of $18.3 billion in October went down to $13.6 billion in November.

Meanwhile, exports during April-December 2011 climbed 25.8 per cent to $217.6 billion. Imports touched $350.9 billion (growing at 30.4 per cent), widening the trade deficit to $133.3 billion.

Releasing the data on Monday, the Commerce Secretary, Dr Rahul Khullar, told reporters that exports during the fiscal 2011-12 would touch the target of $300 billion, while imports are likely to be worth $460 billion taking the trade deficit to (a record high of) $160 billion.

The Commerce Ministry had said earlier that the rising trade deficit was worrying as it may have an impact on the Current Account Deficit as well. The CAD for this fiscal is likely to be 3-3.5 per cent of the GDP, up from last year’s 2.6 per cent.


Pointing to the high fiscal deficit, Dr Khullar said there is no fiscal leeway to provide a stimulus package for exporters even though there is a weak demand for goods in major markets such as Europe, US and Japan.

Dr Khullar also said he would be happy if exports register 20-22 per cent growth in 2012-13, adding however, that it is contingent on monetary and fiscal policies as well as demand overseas.

Referring to the Euro zone crisis and the problems in other big economies, he said “There will be demand constraint and 2012-13 is going to be a very difficult year.”

He said if the exports record a huge jump in the last quarter and cross the $300 billion target, it would be difficult to achieve the $500 billion target for 2013-14 as the base gets increased.

Besides, even though exporters have diversified into new markets such as Latin America, there are difficulties in big economies such as Brazil and Argentina, he added.

Meanwhile, most export sectors have done well so far. During April-December 2011, engineering exports led the pack with $45.3 billion, registering 21.6 per cent growth. Petroleum products exports grew 55 per cent to $43.9 billion.

On the other hand, petroleum products imports rose 40.4 per cent to $105.6 billion, while machinery imports jumped 27.7 per cent to $25.8 billion. Gold and silver imports grew 53.8 per cent to $45.5 billion.

Published on January 16, 2012

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