Exports hit a 21-month high in December

 

The World Trade Organization had cut its global trade growth forecast for 2017 to 1.8-3.1 per cent, from an earlier estimate of 3.6 per cent. China, the world’s largest shipper, is held to be facing a threat with Donald Trump taking over as US President. It reported a 7.7 per cent decline in 2016 exports, its worst since the global economic crisis of 2009. 

 

“We need to be cautious about the Chinese currency devaluation. Since China is facing negative export growth, there might be further devaluation of currency. This will again have adverse impact on our exports,” said Sanjay Budhia, co-head of export policy at business chamber CII.

 

A weaker rupee against the dollar lent competitiveness to Indian exports. It went to 67.93 a dollar in December, from Rs 66.62 in September and Rs 67.53 in June.

 

Pharmaceutical exports grew 12.5 per cent, gems and jewellery by 27.9 per cent, engineering goods by 19.9 per cent, and organic and inorganic chemicals by 18.2 per cent. 

 

Gold imports shrank by 48.5 per cent in December to almost $2 bn, from $4.4 bn in November, which had been a 23 per cent increase. That November spike was partly due to demonetisation of high-denomination currency -- it resulted in a sharp diversion of old Rs 500 and Rs 1,000 notes to buy jewellery on backdated bills. 

 

A sharp increase in oil prices contributed to both higher exports and imports in value terms. Petroleum export grew 8.2 per cent in December; import rose 14.6 per cent. The Indian basket of oil prices almost doubled to $52.74 a barrel, year-on-year. It was $44.46 a barrel in November and $39.8 in April. 

 

“Global sentiments have started showing positive signs and  the US Federal Reserve rate hike and demonetisation have had very limited impact on export. Labour-intensive sectors like gems and jewellery, handicrafts, and marine and engineering have shown impressive growth,” said S C Ralhan, president, Federation of Indian Export Organisations. He added the economy was on course to touch exports of $270-280 bn in this financial year.

 

Services export growth maintained a healthy pace at $13.3 bn and import grew by $8.3 bn.