India’s July trade balance slams June’s surplus; exports continue to decline in double digits

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Due to weak domestic demand and, consequently, weak imports, the trade deficit in July 2020 was significantly lower than in the previous year.

After India had the chance to post a trade surplus for the first time in 18 years in June, July’s trade balance slipped again into negative territory. India recorded a trade deficit of $ 4.83 billion in July, according to the Ministry of Trade and Industry. While imports to India plunged 28.4% year-on-year to $ 28.47 billion in the month, exports fell 10.21% to $ 23.64 billion. However, due to weak domestic demand and, consequently, weak imports, the trade deficit in July 2020 was significantly lower than in the previous year.

Oil imports in July 2020 were down 31.97%, mainly due to weak demand for fuel and the 33.11% drop in the world Brent price. In addition, non-oil imports during the month fell 27.26 percent, while non-oil and non-gold imports plunged 29.15 percent in July. In contrast, the main commodities that experienced a decline in exports were petroleum products (-51.54%); precious stones and jewelry (-49.61%); and leather and leather products (-26.96%)

Also read: RBI Board of Directors Approves Transfer of Rs 57,128 Cr Surplus to Government; thinking of reviving the economy

Imports and exports have plunged since March amid worsening global demand, Indo-Chinese tensions and global trade disruptions due to the coronavirus pandemic. “External demand is expected to remain anemic under the weight of the global recession and the contraction in world trade,” RBI said in its August bulletin. Changing the terms of trade in favor of agriculture is key to supporting this dynamic change and generating positive supply responses in agriculture, he added.

After a 3% year-on-year decline in world merchandise trade during the January-March quarter, the World Trade Organization (WTO), according to its June 2020 update, estimated at 18.5% a year-on-year decline in merchandise trade in the April-June quarter. , due to supply chain disruptions induced by a large-scale pandemic, declining demand, lost jobs and closures. The economic disruption caused by COVID-19 has affected some sectors much more than others. According to UNCTAD estimates, textiles and clothing, office machinery, automotive sectors, energy products and automobiles, chemicals, precision machinery and instruments have experienced a sharp decline in world trade.


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