Both Exports and imports record growth in December

Imports moved into positive territory for the first time since March sending the trade deficit to a 25-month high of $15.44 billion in December as against $9.87 billion in the previous month. The said activity  grew 7.56 per cent to $42.59 billion in December as against $39.59 billion a year ago.

Exports, on the other hand also saw a marginal growth of 0.14 per cent in December, only the third month in 2020 to show growth fuelling optimism about an economic recovery.

Outbound shipments were $40 million higher at $27.15 billion over $27.11 billion a year ago on the back of drugs and pharmaceuticals, electronics, and gems and jewellery exports. Oil exports continued to decline with a 35.35 per cent fall year-on-year (YoY).

 “While intermittent hiccups may persist, we are hopeful that the performance of exports will strengthen in the coming months, as the vaccine rollout gathers speed in the major trading partners,” said Aditi Nayar, principal economist at ICRA.

If oil and gems and jewellery sectors were taken out from the export basket, outbound shipments should have grown 5.50 per cent at $22.22 billion last month as against $21.6 billion in December 2019.

Non-oil, non-gold imports grew almost 8 per cent in December at $28.52 billion versus $26.41 billion in the corresponding month last year. Most category of imports mostly declined in 2020. Their shift to the growth path showed that industrial demand in the economy has picked up in December which would have repercussions for factory production as well as larger economic growth.