Exports bucked the six-month declining spree by registering modest 2.91 per cent growth in February at $27.65 billion, even as there were fears of the coronavirus effect on outbound shipments.
All the major foreign exchange earners such as petroleum products, engineering goods, and electronic items registered expansion in the month year-on-year. However, gems and jewellery exports saw a whopping 20 per cent decline.
Economists warned that exports might again contract in March due to the effects of coronavirus. “...the impact of coronavirus on supply chains may well result in a contraction in exports in the ongoing month,” said Aditi Nayar, principal economist at
Non-petroleum non-jewellery exports were up 6.16 per cent at $21.23 billion in the month. Imports also broke the nine-month trend of fall and clocked a 2.48 per cent rise to $37.5 billion in February. Petroleum also saw a rise in imports despite softening prices.
Consequently, trade deficit fell to the lowest level of $9.85 billion in the month. This would augur well for the current account deficit, which already fell to just 0.2 per cent of GDP in the third quarter of the current fiscal year from 0.9 per cent in the second quarter.
Economists believe that there could be surplus in the current account balance in the fourth quarter of FY20. “Overall, the impact of the coronavirus, the decline in crude oil prices, and constrained demand for gold are likely to contribute to a small current account surplus in Q4FY20,” said Nayar.
Non-oil non-gold imports, taken as an indicator of the health of industrial sector in the country, contracted 0.9 per cent.
However, the rate of fall came down from 4.7 per cent in January, showing only a marginal relief.
Exports declined seven months of 11 in the current fiscal year, for which the data is available. As such, the outbound shipments fell 1.05 per cent to $292.91 billion in the first 11 months of FY20.
On the other hand, imports declined in nine of 11 months for FY20, leading to a 7.30 per cent drop at $436.03 billion during April-February of the current fiscal year.
Trade deficit declined to $143.12 billion in the first 11 months of FY20, against $173 billion a year ago.