The bigger exports challenge is closer home inAPAC than on either side of the Atlantic

• India’s goods exports face stronger headwinds from softer demand in the Asia-Pacific (APAC) region than from an imminent slowdown in the West
  
• India’s trade deficit with the APAC region, which accounts for the lion’s share of the country’s exports, is widening

India’s merchandise exports plummeted 22.0% on-year to $32.9 billion in June, driven by decelerating global growth. They have contracted for five straight months now -more so in the last few months.

A decline in commodity prices has substantially contributed to the fall in the dollar value of India’s exports.

Further, according to data from the Ministry of Commerce and Industry, export volume of 40 out of 75 commodities declined on-year during April-May 2023.

Interestingly, region-wise export data (available till May) indicates that India’s exports face greater threat from the APAC1 region (see chart 1) than from the western economies, which have been in the spotlight.