Exports up 2.29% in November; trade deficit hits 2-yr high

Gold imports during the month of Nov increased by 23.24% to $4.36 billion

Exports rose for the third straight month in November, recording a growth of 2.29 per cent, though the trade deficit shot up to about two-year high of $13 billion mainly due to increase in gold imports.

Exports of engineering products rose by 14.10 per cent, petroleum by 5.73 cent and chemicals by 8.3 per cent, compared to the same month last year, according to official data released on Thursday .

Imports too increased by 10.44 per cent to $33 billion.

Rise in gold imports by 23.24 per cent to $4.36 billion in November pushed the trade deficit to a two-year high of $13 billion as against $ 10.33 billion in the same month last year. Trade experts said they expected export growth to be negative, owing to demonetisation.  It was in November 2014 when trade deficit hit a high of $16.86 billion.

Exporters body FIEO said that although growth is encouraging, uncertain global conditions still remains a challenge. “Though the sentiment still remains low in the global market, factors like US Fed rate hike and demonetisation have also in some way added to the woes of the exporters which may be seen in the figures of coming months,” FIEO President S C Ralhan said.

The country’s merchandise exports during April-November period of the current fiscal too recorded a growth of 0.10 per cent to $174.92 billion.

Imports, however, contracted by 8.44 per cent to $241.1 billion, leaving a trade deficit of $66.17 billion as against $88.57 in April-November 2015-16.

Oil imports last month grew by 5.89 per cent to $6.83 billion. Non-oil imports rose by 11.7 per cent to $26.18 billion. Since December 2014, exports fell for 18 consecutive months till May 2016. Shipments witnessed growth only in June this year, but again slipped in July and August. Exports started recording positive growth from September.

The spike in gold imports in October-November 2016 and the recent rise in crude oil prices amid steady demand for fuels suggest that the current account deficit in H2 FY2017 would range between $10-15 billion, significantly exceeding the muted $3.7 billion for H1 FY2017, Aditi Nayar, Principal Economist at ICRA said.