Principal commodities riding on global growth
India’s exports have been playing a key role in driving gross domestic product (GDP) growth this fiscal at a time when private consumption and investment are struggling to change course.
Last fiscal, when GDP contracted in the pandemic’s wake, net exports (exports minus imports of goods and services) was the largest positive contributor to GDP growth. Particularly, goods exports, with a share of ~12% in GDP, was among the first to cross pre-pandemic levels, in the third quarter of fiscal 2021 itself.
Preliminary merchandise trade data1 shows that the run continues — goods exports have grown more than 55% on-year this fiscal (April-October).
Buoyed, the Government of India has set a merchandise export target of $400 billion for the fiscal2. Achieving this would require an average 18.4% on-year growth in the remaining months.
Global factors have clearly been providing leverage -revving up global growth, inventory restocking in early 2021 as economies opened up, and a pandemic-induced shift towards consumption of goods and away from services. For most of this year, India’s exports have been lifted by the rising global tide.
Not all these factors may continue lending support, though. August and September saw a sequential decline in India’s merchandise exports on a seasonally adjusted basis. But after that, there was some pick-up in October.
