Engineering And Electronics Drive India's Goods Export Growth Amid Global Slowdown; Trade Deficit Narrows To Three-Month Low

Fuelled by increased global demand for engineering and electronic products, India witnessed a 1 per cent rise in goods exports in December.

Meanwhile, the country's trade deficit shrank to a three-month low, primarily due to reduced imports driven by falling commodity prices.

This marks only the third time in the current financial year that India's monthly goods exports have shown an increase over the previous year.

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The growth comes amidst a general slowdown in global demand, influenced by reduced demand from Western countries and the ongoing property crisis in China.

Aditi Nayar, Chief Economist and Head of Research and Outreach at ICRA Ltd, noted that India's merchandise trade deficit for December 2023 was $19.8 billion, lower than ICRA's forecast of $22.7 billion, Indian Express reported.

This was attributed to exports performing better than expected.

Consequently, the Current Account Deficit (CAD) for Q3 FY2024 is projected to be between $16-18 billion, less than the previously estimated $20 billion, but still nearly double the figure from Q2 FY2024.

However, December saw a significant decline in services exports, dropping over 10 per cent to $27.88 billion from $31.19 billion the previous year. This decrease aligns with a slowdown in new export orders for Indian service firms, affected by reduced demand from regions like Australia, Canada, Europe, West Asia, and South America.

The HSBC India Services Purchasing Managers’ Index indicated that new export orders for these firms grew at their slowest rate since June 2023.

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