Merchandise exports and imports have remained in the contraction zone so far during 2023-24, although at a decelerated pace during July and August, the RBI governor said after the central bank’s Monetary Policy Committee meeting.
Merchandise exports and non-oil non-gold imports contracted at a moderated pace in August. However, the RBI governor underscored a growth in services exports, primarily driven by software and business services.
Merchandise exports ($ terms) fell by 11.9% y-o-y during April-August 2023, and merchandise imports by 12.1%. The merchandise trade deficit moderated to $98.9 billion in April-August 2023 from $112.9 billion a year ago as the decline in imports outpaced that in exports.
Merchandise exports experienced a broad-based downturn across commodities. During April-August 2023, 18 out of 30 major commodities (with a share of 73.9% in the export basket) registered a decline on a y-o-y basis, led by petroleum products, gems and jewellery and engineering goods. On the other hand, electronic goods, iron ore and drugs and pharmaceuticals, accounting for 13.5% of merchandise exports, contributed positively to exports. Overall, non-oil exports fell by 7.5% during this period.
In the case of imports, the RBI noted that 17 major commodities, accounting for 55.4% of the imports basket, registered a contraction during April-August 2023, driven by petroleum and crude products, coal and chemicals. Electronic goods, machinery, electrical and non-electrical products and gold imports, on the other hand, expanded. Non-oil non-gold imports fell by 9.0% .According to the RBI, the country’s services exports were buoyed by software services, business and financial services and travel services in Q1 of 2023-24. Services exports growth moderated substantially to 6.8% during April-August 2023 from 32.1% a year ago, partly reflecting a slowdown in key partner countries.
