India's exports unlikely to improve in a hurry, says DBS

India's exports shrank 16 per cent in 2015-16, and going ahead, it is unlikely to improve in a hurry due to its close correlation with global imports, a DBS report says.
According to the global financial services major, weak global demand weighed on India's exports. Moreover, falling commodity receipts and the real rupee strength played their part.
"Looking ahead, India's exports are unlikely to improve in a hurry due to its close correlation with global imports," DBS said in a research note.
Meanwhile, the World Bank and the IMF have downgraded their global growth outlook, with most of India's key trading partners facing sluggish growth at home.

"More measures to support the trade sector are on the cards. Though they might provide short-term relief to the external sector, they are no panacea," the report added.
Exports dipped 5.47 per cent in March to USD 22.71 billion, registering the 16th consecutive month of decline amid contraction in shipments of petroleum and engineering goods with a tepid global demand.

Trade deficit also fell to USD 5.07 billion last month as imports too contracted by 21.56 per cent to USD 27.78 billion. The trade gap - the difference between imports and exports - was USD 11.39 billion in March 2015.

While the country's overall GDP growth has been robust and even FDI inflows have been consistently growing, exports have been its Achilles' heel for several months now.
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Nomura too said that overall, India's trade data indicates that export volumes have started improving but are still at very low levels.
"Despite weak export volumes, India's trade deficit narrowed to USD 117.9 billion in 2015-16 from USD 137.7 billion in 2014-15, owing to the positive impact of low commodity prices.
"Accordingly, we expect the current account deficit to narrow to 0.9 per cent of GDP from 1.3 per cent in FY15," it said in a statement.

It said that export volumes rose for a second consecutive month, indicating an improvement in global demand, although it is still very fragile.