MERCHANDISE EXPORTS JUMP IN MAY

Despite the second wave of infections, merchandise exports grew both yearly and sequentially in May. With imports declining sequentially, the trade deficit shrunk to an eight-month low of $6.32 billion in May.

Merchandise exports in May 2021 stood at $32.21 billion—67.39 per cent higher than the low base of $19.24 billion in the lock-down-hit May 2020. The exports were also 7.93 per cent higher than $29.85 billion in the pre-pandemic May 2019. Most importantly, exports continued to grow sequentially by 6.6 per cent compared to $30.21 billion in April 2021, despite the second wave.

In the case of imports of $38.53 billion, there has been an increase of 68.54 per cent over $22.86 billion in May 2020, but a decline of 17.47 per cent over $46.68 billion in May 2019. Imports were also 15 per cent down sequentially compared to $45.45 billion in April 2021.

This helped India cut its trade deficit to $6.32 billion compared with $15.24 billion in April 2021 and $16.84 billion in May 2019. However, the trade deficit was higher than $3.62 billion in the lock-down hit May 2020.

“The merchandise trade deficit shrunk to an eight-month low $6.3 billion in May 2021 from $15.2 billion in April 2021 as the state-wise restrictions widened, curbing domestic demand for both gold and oil. A predominant 63 per cent of the decline in the trade deficit in May 2021 relative to April 2021 was on account of the collapse in gold imports, with the balance led by a narrower oil deficit,” said Aditi Nayar of Icra.