UPDATE 1-India's June exports fall 5.5 pct, but trade deficit narrows

Fri Jul 13, 2012 2:12pm IST

(Recasts, adds detail)

By Arup Roychoudhury and Matthias Williams

NEW DELHI, July 13 (Reuters) - India's exports fell nearly 5.5 percent in June due to weak demand from Europe and the United States, a trade ministry official said, adding pressure on Asia's third-largest economy.

Imports also fell sharply, however, thanks in part to lower global oil prices, and narrowing the trade deficit to $10.3 billion compared to the previous month, something of a silver lining that may help assuage concerns about India's balance of payments.

Exports were down 5.45 percent to $25.1 billion in June from a year earlier, while imports fell 13.46 percent, Anup Pujari, director general of foreign trade told reporters on Friday, citing provisional data. The final numbers will be published next month.

"World over, there has been a tremendous dip in the world trade," Trade Secretary S. R. Rao said at the same event. He warned that the debt crisis in Europe, which accounts for a third of India's trade, showed no sign of a resolution.

"In the euro zone, we don't see any finality. Apart from distress in Greece, now we find that both in Spain and Italy also their borrowings are more than their actual GDP."

"The sad news is that the U.S. market is also contracting," he said, forecasting up to two years of depressed trade.

Exports account for more than a fifth of India's GDP.

Other Asian exporters also reported gloomy news on Friday as global demand sputters, with China's second-quarter growth slowing to a three-year low and South Korea's central bank cutting its GDO growth forecasts for the year. Singapore reported a surprise contraction.

CURRENT ACCOUNT DEFICIT

India's current account deficit touched a record high in the March quarter, keeping the balance of payments in deficit for the second quarter in a row.

The widening current account deficit has weighed on the rupee, pulling the currency to a record low of 57.32 to the dollar on June 22.

India's economic growth has slowed to its worst pace in nine years and inflation is stubbornly high. Economists say an uptick in industrial output is too small to signal a recovery.

After recording strong growth for much of last year, India's overseas sales tanked in March and have risen only one month since. Exports between April and June fell 1.7 percent, totalling $75.2 billion.

Exports in sectors where India had shown strong growth last year, engineering goods and petroleum products, fell in June.

The Asian Development Bank on Thursday cut its 2012 growth forecast for India to 6.5 percent from a forecast of 7.0 percent made in April. (Reporting by Matthias Williams and Arup Roychoudhury; Editing by Frank Jack Daniel)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Market Eye

Sensex, Nifty rise to second consecutive record high

Sensex, Nifty rise to second consecutive record high

The BSE Sensex and Nifty on Friday rose to their second consecutive record highs. The 30-share Sensex surged as much as 1.5 percent to an all-time high of 27,759.01. The broader Nifty gained as much as 1.49 percent to a record of 8,291.65.  Full Article 

REUTERS SHOWCASE

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Leisure Riding

Leisure Riding

Harley-Davidson woos affluent young Indians with bike culture  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage