Export growth still depends on demand in Europe, North America

The trade data for May released by the Commerce Ministry last week shows a year-on-year (YoY) decline of 10.31 per cent for merchandise exports and 6.59 per cent for merchandise imports leading to a five-month-high trade deficit of $22.22 billion. In all probability, it is the fall in commodity prices that has led to these declines and not necessarily the volumes. Indeed, the widening trade deficit suggests a relative pick up in the domestic economy, where the growth indicators are encouraging and prices are moderating, as the Reserve Bank of India (RBI) pointed out in its recent bi-monthly monetary policy

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