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India’s merchandise exports witnessed an increase of 67.38% in May, trade deficit narrows to an eight-month low

After a dent in the domestic demand owing to the pandemic, a rise in external demand kept the exports robust with the trade deficit touching an eight-month low.

Ministry of Commerce & Industry has announced that India’s merchandise exports in May 2021 increased by 67.39% over May 2020. At $32.21 billion, the growth was driven by sectors such as engineering, pharmaceuticals, petroleum products and chemicals, as per the commerce ministry’s press release.

On the other hand, imports in May rose by 68.54% to $38.53 billion from $22.86 billion in May 2020. However, it was still lower than 2019 when the imports stood at $46.68 billion.

The Ministry in its release stated, “India is thus a net importer in May 2021 with a trade deficit of USD 6.32 billion, an increase of 74.69 per cent over trade deficit USD 3.62 billion in May 2020 and reduction by 62.49 per cent over trade deficit USD 16.84 billion in May 2019.”

After a dent in the domestic demand owing to the pandemic, a rise in external demand kept the exports robust with the trade deficit touching an eight-month low. 

Notably, exports during April – May this year jumped to $62.84 billion, as against $29.6 billion in the same period last year showing a sign of recovery. It was $55.88 billion in April-May 2019, as per the ministry data.

The top five commodity groups of export that recorded healthy growth during May 2021 as compared to May 2020 include cereals, jute products, petroleum products, handicrafts and gems & jewellery. 

Impact of the second wave of the pandemic

Pushing several states into a strict lockdown due to the sudden surge in new coronavirus cases, the domestic delivery is expected to be delayed. Moody’s Investors Service which had forecasted economic growth of 13.7% in FY22 has slashed it to 9.3%, citing a negative impact of the second wave of the pandemic.

While the prospects for the world economy look positive, the recovery is likely to remain uneven with the modest recovery of the emerging markets. 

 

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Staff reporter at OpIndia

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