Exports to China, which flattened the Covid-19 curve, grew 78% year-on-year in June. In contrast, exports declined to western economies like the US, Brazil and the UK, which struggle to contain the infection, according to a CRISIL report on Friday.
India’s exports have shown a massive improvement sequentially, as the yearly contraction narrowed to -10.2% in July from a severe -60.2% in April, it said.
“The reason is a sharp rise in exports to economies which have been able to control the pandemic,” CRISIL said.
Where exports to China grew the most, those to other east Asian economies which had success in controlling the rise in cases, also grew substantially. These included Malaysia (76%), Vietnam (43%) and Singapore (37%). Put together, they make up 16% of India’s export basket, the report said.
This explained why exports to certain economies were looking up even as overall exports were still declining, albeit at a slower pace.
“The inference? Export prospects for this fiscal will pivot on the trajectory of the Pandemic across countries,” CRISIL said.
China entered and controlled the pandemic much quicker than other economies. Its Covid-19 curve peaked in February after which activity resumed in the economy.
The result was that China reported a 3.2% growth in the April-June quarter this year compared to the US, which saw its deepest quarterly plunge in history at -32.9% for the same period.
While exports to the US declined 11.2% in June over the year, the figure was a sharp -33.8% for the UK and -6.3% for Brazil. As of Friday, the US recorded 5.75 million Covid-19 cases while Brazil and the UK had 3.5 million and 0.32 million cases respectively.
As economies grappled with containing the pandemic, some were seeing a second wave, and a vaccine was still some time away, the report said.
“So there’s no telling if this pickup in exports will last or not – but we could read the cues from closely watching the domestic and global spread of the pandemic in coming months,” it said.