India ahead of rest of Asia, merchandise exports up 6.2% YoY

India witnessed a 6.2% YoY surge in merchandise exports in October 2023, outpacing the recovery rate observed in the rest of Asia. There was a 2.4% YoY growth in India’s exports during the August to October 2023 period, indicating a favorable trend compared to other Asian economies.

merchandise exports

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In October 2023, India’s merchandise exports displayed a year-on-year increase of 6.2%, and for the August to October 2023 period, they registered a 2.4% growth on a year-on-year basis, showing a marginal recovery ahead of other Asian countries, as indicated by a report from ICICI Securities.

South Korea also saw a positive trend with a 5.1% year-on-year exports growth in October 2023, marking the end of 13 consecutive months of contraction. Meanwhile, Taiwan experienced a moderate decline of 2.8% in exports for the Aug-Oct’23 period, although there was a more substantial year-on-year decrease of 12.8% for the Jan-Oct’23 period. In contrast, China faced challenges, as its goods exports declined by 8.2% year-on-year in Aug-Oct’23, a worse performance than its contraction of 5.2% year-on-year for the Jan-Oct’23 period, mirroring India’s 4.9% year-on-year decline during the same Jan-Oct’23 timeframe.

Prasenjit Basu and Laavanya Sisaudia, analysts and economists at ICICI Securities, said, “Given the broad based cyclical rebound in engineering goods, textile and pharmaceutical exports, we expect India’s merchandise exports to accelerate further through the rest of FY24 and into FY25.”

India’s services trade surplus has demonstrated robust growth, surpassing services imports, leading to a 21.7% year-on-year expansion in the services trade surplus for the period of April to October 2023. Additionally, as the merchandise deficit witnessed a 12% year-on-year decline, ICICI Securities suggests that the current account deficit (CAD) is anticipated to have narrowed to approximately 0.7% of GDP during this period.

The analysis further notes that the final quarter of the fiscal year typically exhibits strength in the current account balance. Therefore, there are expectations that the CAD will contract to 0.4% of GDP for the entire fiscal year 2024. This projection assumes an average Brent crude oil price of $90 per barrel in the December 2023 to March 2024 period. The report also suggests that if Brent settles near its current levels of $80.5 per barrel, a current account surplus is likely for the fiscal year 2024.

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