Despite tensions with arch rival China, India ‘s exports to its East Asian neighbour have recovered faster than to others such as the United States and the United Kingdom, with shipments flowing back to countries where the Covid-19 spread has been checked, according to CRISIL Research.
Latest country-wise data for June shows India’s exports to China rose 78% on-year, while the recovery to other east Asian economies that have flattened the covid curve have been equally strong — exports to Malaysia rose 76%, Vietnam 43% and to Singapore 37% respectively.
In contrast, exports declined to western economies such as the United States, Brazil and the United Kingdom declined by 11.2%, 6.3% and 33.8% respectively. All these countries have seen a much higher caseload and have been struggling to control the pandemic.
Interestingly, India’s exports of commodities topped the shipments with iron-ore leading the way, up 63.1% on year followed by shipments of rice and spices, which rose by 32.7% and 22.9% respectively.
Fruits and vegetable exports were up 11% during the same month, indicating that the government’s bet on the agriculture and resources sector for an economic recovery are not misplaced.
However, India’s exports as well as imports have consistently declined since March this year, ever since the pandemic disrupted business activity and global trade as well as domestic demand.
But the pace of decline is slowing, especially for exports. From a trough of -60.2% on-year in April it turned to -10.2% in July, data showed.
In comparison to the rebound in exports, India’s imports from China continue to decline, owing to weaker domestic demand and import restrictions. This phenomenon has significantly brought down
a historical trade deficit with China.
“Unfortunately, the peak of the pandemic remains uncertain, with some economies still struggling to control it, some seeing a second wave, and a vaccine is still some time away. So there’s no telling if this pickup in exports will last or not,” says CRISIL Research.
The cues to how trade will shape up in coming months won’t be difficult — watching the domestic and global spread of the pandemic in coming months.