If Monday's macro economic data showed a revival in the economy, Tuesday came out with data that revealed uncertainty in the external world. After rising for three consecutive months, exports dipped by 0.25 per cent in February as demand remained lacklustre overseas.
However, exporters also attributed decline in exports to container shortages and supply disruptions due to increasing Covid cases in some states back home.
According to preliminary trade data released by the commerce department here, exports stood at $27.4 billion in February this year against $27.67 billion in the same month last year. The decline in exports was also to do with a high base of last year as almost the same level of exports in January had shown 6.16 per cent growth.
Pharma as usual continued to grow in February as well, up 14.58 per cent, but major foreign exchange earners such as petroleum, gems & jewelleries and engineering goods clocked de-growth.
Value wise, it was primarily petroleum products which dragged down total exports. It declined 27.13 per cent. If petroleum is taken out, exports rose 3.55 per cent at $25.16 billion.
Earlier, the World Trade Organization (WTO) had said the high rate of global merchandise trade growth (in volume) during the fourth quarter of 2020 is unlikely to sustain in the first half of 2021 since key indicators appear to have already peaked.
Imports on the other hand rose for the third consecutive month by almost seven per cent at $40.55 billion in February. Among them, gold imports were up by 124 per cent.
Non-oil non-gold imports rose 7.4 per cent at $23.85 billion in the month. The growth in non-oil non-gold imports were almost equal to 7.50 per cent in the previous month. This showed that the domestic economy is on a revival path and is demanding products.
Trade deficit or a gap between imports and exports declined to $12.88 billion in February from $14.54 billion in January.
Aditi Nayar, principal economist at ICRA, said the trade deficit in February was lower than our forecast by $1 billion, on account of oil imports, and also marked a moderation from the average $15 billion deficit recorded in the previous two months.
FIEO president Sharad Kumar Saraf said,"We continue to see signs of further revival not only in the order booking positions but also in the demand from across the globe, paving the way for much better days and months for the sector."
He, however, said rising exports from China has led to the shortage of containers in the region as most of the empty containers are available only for exports from that country. He said the shipping lines and container companies are being paid hefty premiums for bringing empty containers back to China.
Barclays in a note said overall, continued improvement in imports is likely a reflection of the faster pace of normalisation in economic activity.
Exports declined 12.32 per cent at $255.92 billion during the first eleven months of the current financial year. Imports on the other hand fell 23.09 per cent at $340.88 billion during this period. As a result, the trade deficit stood at $84.06 during April-February of 2020-21, down 44.5 per cent compared to $151.37 billion during the corresponding period of the previous year.
"We expect the trade deficit to print at $12.5-13.5 billion in March 2021, resulting in a current account deficit of under $5 billion in that quarter," Nayar said.