India’s merchandise exports fell on-year for the second consecutive month in January, by 6.6% to $32.9 billion, despite a favorable base effect. This implies sequential softening in exports during the month. Exports in December 2022 stood at $38.0 billion (revised up from $34.5 billion reported earlier).
Core (non-oil, non-gold) exports fell 7.5% on-year in January. While oil exports grew mildly on-year, they dwindled sequentially despite an uptick in international crude oil prices and a reduction in tax on petroleum exports in the month, suggesting softer global demand. The resilience of goods exports is being tested now as the impact of monetary tightening on demand conditions in the advanced economies unfolds. The slowdown in global growth this year would be led by the advanced economies, especially the US and the euro area - two of the largest export destiations for India1.
Merchandise imports fell on-year in January, but at a slower pace than exports. At $50.7 billion, they reduced 3.7% on-year (greater than the 0.2% on-year decline in December). Core imports contracted on-year - for the first time this fiscal - signalling some softening in domestic demand. They fell sequentially as well. Oil imports declined sequentially, in tandem with oil exports, despite international crude prices rising to an average of $80.4/barrel in January from $78.1/barrel in December.
