Merchandise exports increased by 69 percent to $32.3 billion in May from the previous year, owing to a favourable base and increasing demand from key countries. Despite the second pandemic wave, exports were more than 8% higher than in May 2019 (pre-pandemic), according to preliminary figures issued on Tuesday by the trade ministry.
Following an excellent rate of expansion in the aftermath of the Covid-19 epidemic last fiscal year, drug and pharmaceutical exports fell by 5.4 percent in May to $1.9 billion, owing to fewer Covid cases in the US and EU.
In what appears to be a strong trade rebound, goods exports have already crossed the pre-Covid (same months in 2019) level for three months in a row. The provisional export growth estimate for May is higher than a preliminary estimate of 67 percent that was released previously.
Of all, export growth had been slow even before the epidemic — outbound shipments increased by 9% in 2018-19, but then fell by 5% in 2019-20. Only a sustained upswing over the next 2-3 years will allow the market to reclaim its former heights.
Despite the severe crises and localised lockdowns in key industrial states, May 2021 export performance was encouraging.
Imports increased by over 74 percent to $38.6 billion in May, as the base remained favourable and domestic demand showed signs of improvement. Imports, on the other hand, were down by more than 17% from May 2019. Petroleum imports increased by 179 percent to $9.5 billion in May, owing to higher crude oil prices, while gold imports increased by 790 percent to $679 million, owing to a low base. Imports of vegetable oil increased by 149% to $1.4 billion.
The strong increase in trade in recent months, despite the fact that it was aided by favourable base effects (exports were down 36% and imports were up nearly 51% in May 2020), suggests the supply side is better prepared to respond to a pick-up in demand from major markets. The base effect will, of course, continue to help trade growth in the coming months.
In May, the trade imbalance shrank dramatically to $6.3 billion, down from $15.1 billion the previous month.
Importantly, core exports (excluding petroleum and gems and jewellery) increased by about 47% in May compared to the same month the previous year, albeit at a slower rate than overall goods shipments. Exports of this type increased by over 12% in May 2019 compared to the previous month. Core imports increased by 52% year over year but fell by 3% in May 2019.
Analysts have previously predicted that the continuation of high exports (in absolute terms) in the coming months will mark a significant turnaround, citing the roller-coaster ride of exports following the pandemic last fiscal year.
Last month, however, commerce secretary Anup Wadhawan expressed optimism that the current wave of the Covid-19 epidemic would have little impact on exports in the next months and that the country’s external trade would continue to operate successfully.
Petroleum items (227 percent ), gems & jewellery (179 percent ), cotton yarn/fabrics/made-ups, handloom items, etc. (138 percent ), clothes (114 percent ), electronics (91 percent ), and engineering items were among the major commodities or groups with substantial year-on-year growth in May. (53 percent ).