Sluggish exports are not a worry for India
India’s exports have stalled, but a weaker rupee and a small export share of GDP mean the slump matters less than it looks.
Net Exports refer to the difference between the total value of exports and imports of the country. India’s total exported goods represent 2.9% of its overall Gross Domestic Product for 2019 ($11.33T PPP USD). That 2.9% for exports to overall GDP per PPP in 2019 compares to 3.1% in 2018.
The exports have been saved last fiscal year by an ever expensive dollar- steadily increasing from Rs.63.4 to Rs.73.4 against the dollar between Jan and Oct 2018. This corresponded to stagnant exports in the same period.
However, a drop in its price from Oct’18 to early July’19 from Rs.73.4 to Rs.68.4 against the dollar, paired with increasing oil prices slowed down the already struggling export sector. The figures conclude a growth of -1.1% in Oct’19.
“World trade will continue to face strong headwinds in 2019 and 2020 after growing more slowly than expected in 2018 due to rising trade tensions and increased economic uncertainty,”
WTO
India’s key exports in FY2018-19 were petroleum products, followed by pearls, precious, semiprecious stones, drug formulations and biologicals, gold and other precious metal jewelry, iron and steel, as well as organic chemicals. Together, these top ten commodities accounted for about 46 percent of India’s total export.
Pharmaceutical products, automobile, transport equipment, machinery, and readymade garments are also major exports for India.
Since Indian exports contribute less than 3% to the GDP, slowdown here is not something to worry about too much. India does not rely heavily on its export market. Exports today are at the same level as they were in FY11. Exports have remained consistent for the past 9 years with the exception of a period of degrowth from early 2015 till mid 2017.
First published on thekakisto.wordpress.com. Figures are as cited at the time of publication; check the linked sources for later revisions.