Merchandise imports spike shows demand revival, growth pick-up

The continuing increase in imports indicate strengthening of domestic demand and will help accelerate the overall GDP growth from the June quarter onwards, says a report.
"Non-oil non-gold imports growth (a proxy for domestic demand) continued to post strong double-digit growth at 17.2 per cent year-on-year in June compared to 18 per cent in May," foreign brokerage Morgan Stanley said in a report today.
The overall import growth moderated to 19 per cent in the month as against 33.1 per cent in May, it added.
"Imports growth data has remained strong, indicating a robust pick-up in domestic demand. This has been corroborated by other high-frequency growth indicators, reinforcing our view that growth will accelerate from the June quarter onwards," it said.

GDP growth came down to 6.1 per cent for the March quarter, which is below what the government would like to be or the potential growth rate.
One of the primary reasons for the dip in growth, according to experts, was the surprise note ban, wherein government pulled out 86 per cent of currency in circulation last November in a predominantly cash-based economy, pulling down growth momentum.
The brokerage said the narrowing of trade deficit to USD 13 billion in June from USD 13.8 billion in May is higher than its expectation and consensus and attributed this to the stronger-than-expected growth in imports.

Exports growth decelerated to a seven-month low of 4.4 per cent in June from 8.3 per cent in May, partly owing to base effect and largely in line with estimates, it concluded.