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

Earnings Season

REUTERS SHOWCASE

Monsoon Revives

Monsoon Revives

Monsoon revival keeps rain above average   Full Article 

Tackling Food Prices

Tackling Food Prices

India to free up extra 10 million tonne wheat in open market  Full Article 

Just Not Enough

Just Not Enough

Amazon's smartphone fails to kindle a "Fire" among reviewers.  Full Article 

Struggling Economies

Struggling Economies

Asian economies to struggle on weak export demand - Reuters poll  Full Article 

Mining Roadblock

Mining Roadblock

Coal India's plans for 20 mines hit by land, environment delays  Full Article 

Power Jolt

Power Jolt

UAE's TAQA pulls out of India power plant deal with Jaiprakash  Full Article 

Factory Sector

Factory Sector

China July HSBC flash PMI at 18-month high of 52.0   Full Article 

Currency Reserves

Currency Reserves

Sri Lankan, Indian central banks agree scope for government debt buys.  Full Article 

Reuters India Mobile

Reuters India Mobile

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