The improvement in the country’s export numbers in July was led by a 78% spike in shipments to China and other Asian economies that had successfully contained the pandemic, Crisil said in a report. These destinations constitute 16% of the overall exports basket.
The contraction in exports narrowed to -10.2% in July from -60.2% in April when India was under a strict lockdown due to the COVID-19 pandemic.
Contraction in shipments improved to 50% in May and 30% in June. “While July shipments to China jumped a full 78%, the same to Malaysia jumped 76%, Vietnam (43%) and Singapore (37%). East Asian economies constitute 16% of our export basket,” Crisil said on Friday. “Exports are flowing back to economies that have checked the affliction. That explains why exports to certain economies are looking up, while overall exports are still declining, though at a slower pace,” according to Crisil house economists DharmaKirti Joshi and Pankhuri Tandon.
In contrast, exports declined to Western economies such as the U.S., Brazil and Britain which saw a much higher caseload and were struggling to control it, they argued.
While exports to the U.A.E plunged -53.2%, the same to to Britain contracted by 38.8%, and to the U.S. was a -11.2% and to Brazil at -6.3%.
This means that export prospects for this fiscal will pivot on the trajectory of the pandemic across countries. It will rise to those countries which have controlled their caseload and restarted activity.
China is a case in point, as it entered and controlled the pandemic much earlier than others.
As a result its economy grew 3.2% in the June quarter, in contrast to sharp declines reported in other major economies.
A closer look at the export numbers show that the growth is led by industrials and agri items — iron ore over 63%, rice close to 33%, spices 23%, organice and inorganic chemicals over 19%, fisheries 11% and pharma close to 10%.
Significantly, inward shipments from China have been contracting massively since the beginning of the year reaching -60% in June bringing down trade deficit with the world’s largest exporting nation to around $10 billion in June from close to $50 billion in January.