What trade data tells you about India’s economy

What trade data tells you about India’s economy

Numbers have a story to tell. All over the world, financial markets rely on statistics to build a narrative. 

Here is a way you can build one part of the India story: 

• Exports fall: India reported weakest exports at $ 21.3bn in nearly five years. However, analysts also highlight that Korea’s exports fell to a six-year low while Chinese exports also fell significantly. These two are major exporting economies. The level of exports indicates that the global demand for goods and services is weak. 

• Oil prices fall helps: The dramatic slump in the international crude oil prices has resulted in the value of Indian oil imports dropping to $7.4bn in August 2015 from $12.5bn in the year-ago period. This is a significant saving and helps India maintain the current account balance. Effectively, it saves the rupee from falling sharply. 

• Gold imports surge: Ahead of the festive season, consumers see an opportunity to buy gold as prices remain weak. At $5bn, gold imports surged two and a half times over last year. Indians are effectively back in the gold market. 

• Non-oil, non-gold imports: These are imports of agriculture, electronics or capital goods. Such imports dipped marginally to $21.4bn over last year. An analysis of this data by Yes bank suggests that fertilizer imports rose 80% over last year and were a major contributor. 

• What does this data mean: Sluggish exports mean that the global demand remained weak. Had it not been for falling oil prices, India would have witnessed a rising current account deficit (CAD) and the rupee would have gone down like currencies in other Asian markets. The CAD is the money India owes the world in foreign exchange. 

Happy  Investing

Source:Yahoofinance.com