India: Exports expand for second consecutive month and trade deficit narrows
March 12, 2013
In February, exports rose 4.2% over the same month last year in USD terms. The monthly expansion came in well above the 0.8% increase reported in January and market expectations. Despite the monthly improvement, the 12-month sum of exports declined 5.3% in February (January: -5.1% year-on-year), which marked a sixth consecutive drop.
Meanwhile, imports increased 2.7% in February, slower than the 6.1% expansion tallied in January. As exports outpaced imports, the trade deficit narrowed from USD 20.0 billion in January to USD 14.9 billion in February, which represents the lowest shortfall since June 2012. The February reading pushed the 12-month moving sum of the trade balance to a USD 200 billion deficit, which was virtually unchanged from January's figure, but well above the USD 174 billion shortfall registered in the February 2012.
The government aimed for exports to reach USD 360 billion this fiscal year (ending March), but the 12-month moving sum of overseas sales have so far achieved USD 263 billion. With only one month left, the trend suggests that full-year exports will miss the target.
In December, the government announced a plan to boost exports and extended loans programs for exporters by one year. Moreover, the government will announce its foreign trade policy for the fiscal year by the end of March and is expected to unveil more measures for supporting exporters.
FocusEconomics Consensus Forecast panellists anticipate exports to increase 9.8% in the fiscal year 2013/14, to reach USD 330 billion. In FY14/15, the panel sees exports expanding 15.7%.
Author: Ricardo Aceves, Senior Economist