What is merchandise trade?
Trade includes goods and services. Merchandise comprises imports and exports of goods. Services are shown separately.
What were the numbers of merchandise foreign trade in August?
Exports fell for the second time in three months, while imports declined for the third successive month. Exports dropped over 6% to $26.1 billion in August as 22 of the 30 major sectors — including petroleum, engineering, leather, textiles and gems and jewellery — saw a fall in the value of shipments.
Imports were down 13.5% to $39.6 billion, led by oil and gold. While crude oil shipments fell nearly 9% to $10.9 billion, gold imports through the official channel crashed 62.5% to $1.4 billion in August 2019 compared to $3.6 billion a year ago.
What does it mean?
In the first quarter, GDP growth has slowed to a six-year low of 5%.
Why did the gold imports fall?
The de-growth (fall) in gold imports is because of the recent increase in prices of the precious metal, which has contributed to the contraction in imports of stones and precious metals as well. Such imports may revive to some extent in the festive season.
How did the trade deficit narrow down?
Steeper fall in imports compared to exports led to the trade deficit narrowing to $13.5 billion in August, as against $17.9 billion in the corresponding period last year.
What are the implications of the trade data?
The trade data comes as a setback as the country was expecting that exports would help reverse a part of the industrial slowdown, which has resulted in job losses and factory shutdowns with a downward movement due to demand going down.
What are the immediate issues that worry exporters?
What is Interest Equalisation Scheme (IES)?
Avail of pre- and post-shipment credit at lower rates is done through the Interest Equalisation Scheme (IES).
What was the government’s response to the poor trade data?
Government came out with a stimulus package for exports. Highlights are: