December Foreign Trade Data

Foreign trade data, in merchandise trade, for the month of December 2012 was released yesterday by Press Information Bureau. 

The gloom continues, with trade deficit widening to 147 USD Billion for the April-Dec 12 period, higher by more than 10 USD Billion, when compared to the same period last year. The summary is pasted below: 

Foreign Trade (Merchandise) Data - Dec 2012

The oil imports constitutes roughly one third of total imports. It increased by 12.18 percent over the period of April-Dec, compared to last year. In December, it increased by around 24% over last year. That's disturbing. 

The gold import details are not yet available. I am expecting some action here, given the announcements on possibility of higher taxation on gold imports in future. 

The above values are in dollars. In terms of rupees, the exports grew (rupee depreciated) by around 9.35% in April-Dec period, and the imports grew faster at a rate of around 14.76%. So, in both dollar and rupees terms, the trade balance deteriorated. 

This economic times article, caught my attention, because they published Govt's thoughts on the issue after the press release. Two statements are noteworthy. The first one is,

Commerce Secretary S R Rao said that the fall in exports have been slightly arrested and "with a new set of incentives, which we get into force from January 1, we expect that in the current quarter (January-March 2013), there will be a further improvement in the export performance". 

He said the world trade has not performed well in 2012 and the year was the "worst" in terms of global trade. 

"If we look at the WTO forecast for 2012, initially they forecast that the world trade will grow by 3.9 per cent but that has been scaled down thrice and it ended with 2.5 per cent. The 2012 rate of growth in the world trade has been less than half of past 20 year average," he said. 

The second is, 

Reacting to fall in exports, Apparel Export Promotion Council ( AEPC) Chairman A Sakthivel said the government should take some steps in the Budget to boost shipments. 

Agreed Sir. To the second one. But pray, how do you do that? 

The first one is point to ponder. The world trade grew by 2.5%, but our exports actually declined, and our trade deficit increased. This doesn't sound good to me. This area needs to be explored more. 

The blogger has already posted about the new set of incentives being talked about here. Honestly, unless global situation improves, I don't see how we will manage to boost exports with these incentives in the short run (with horizons of less than a quarter). In the long run, of course, market and product diversification linked incentives will produce results.