Exports Slowdown and Growing Trade Deficit-VRK100-14Oct2011

Exports Slowdown

And Growing Trade Deficit

Rama Krishna Vadlamudi, HYDERABAD       14 October 2011
www.ramakrishnavadlamudi.blogspot.com

India’s exports and imports growth rates are decelerating as per the latest figures announced for month of September 2011.

India’s export growth has slowed down compared to the high growth witnessed in the previous months. The figures for September 2011 are out with exports growing at 36 per cent to $ 24.8 billion and imports recording a growth of 17 per cent to $ 34.6 billion.  The export growth is being led by engineering goods, petroleum products, manmade yarn and readymade garments. On the other hand, the import growth is mainly due to higher demand for gold & silver, petroleum products, machinery and electronics.

During April-September 2011, exports touched $ 160 billion, a growth rate of 52 per cent over the corresponding period of last year. Whereas, imports reached $ 234 billion during the same six-month period, registering a growth of 32 per cent – with the trade deficit widening to $ 74 billion.

Trend of the Exports in the Last Six Years

Composition of Exports:

	Composition %	Composition %	% change
	2010-11	2004-05
Engineering goods	23.8	18.4	5.4
Petroleum products	16.7	8.5	8.2
Gems & Jewellery	14.5	16.7	-2.2
Chemicals	9.5	12.4	-2.9
Textiles	8.9	16.0	-7.1

The shares of engineering goods and petroleum products are growing in the exports basket, while that of textiles, chemicals and gems & jewellery are declining from 2004-5 onwards as can be seen from the table above.

Exports by Destination:

	Region %	Region %	% change
	2010-11	2004-05
West Asia	20.6	15.6	5
European Union	18.6	22.0	-3.4
North-East Asia	16.6	15.3	1.3
North America	10.7	17.8	-7.1
Africa	8.3	6.7	1.6
Latin America	4.3	2.6	1.7

By region, the percentage of exports to West Asia, Africa and Latin America are on an upward trend; while the percentage to the US and European Union are on the decline as shown in the table above.

The commerce secretary, Rahul Khullar, says that there visible signs of exports growth slowing down in the next two quarters due to problems in the US and Europe.

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Note on author: Author is an investment analyst and writer. The views are personal and this is written only for information purpose. The author has a vested interest in the stock markets. Readers are advised to consult their certified financial adviser before taking any investment decisions.

Author’s articles on financial articles can be accessed at:

www.ramakrishnavadlamudi.blogspot.com