Softening of Indian Economy Evident in Trade Data

Econintersect India News Roundup:  India has reported a 13.5% contraction of exports in June 2012, and has blamed the contraction on a prolonged slowdown in key markets such as Europe and the United States.  The May 2012 data showed an export contraction of 4.16%, whilst imports contracted 7.36%.

Econintersect sees imports into a country as a litmus test of an economy.  Import contraction is a warning sign of a soft economy. The Times of India published a report which agreed with the Econintersect view:

“The economy is slowing, industry is slowing and imports have been falling also due to the rupee depreciation. This reflects the deep slowdown,” D K Joshi, chief economist at ratings agency Crisil, said referring to the slide in imports.

Using USA export / import data – the softening of the Indian economy is evident from following the blue line in the following graph.

Year-over Year Change – Imports & Export

Trying to correlate trade data between countries is problematic – especially the FAS values (free alongside ship) which may vary between the declared import value and the declared export values.  Other issues are exchange rates and the delay between when a product or service is exported and when it is imported.

Further reading on Indian Economic Softness:

Consumer goods in India: Seducing shoppers in Sticksville

– http://www.economist.com/

GROWTH in India is slowing. The economy expanded at an annualised rate of 5.3% between January and March, the slowest for seven years. Shoppers are scrimping. Sales of consumer durables fell by 10-15% in the year to March 2012, executives say. Indian factories cranked out 30% fewer air conditioners and 15% fewer colour televisions, official data show…

FIIs pour in Rs 7,300cr so far in July

– http://timesofindia.indiatimes.com/

There are early indications that foreign investors are reversing their bets on India, at least when it comes to investing in stocks.

Other Indian News:

JLR to launch several sports cars in next two years

– http://news.yahoo.com

India’s Tata Motors-owned British luxury brands Jaguar and Land Rover will launch several sports cars and fuel-efficient engines in the next two years, Tata group chairman Ratan Tata said Friday.

Global spending on medicines nears $1 trillion

– http://timesofindia.indiatimes.com/

Annual spending on medicines in developing countries like India will increase from $194 billion last year to $345-375 billion by 2016, or $91 per capita.

Tarun Das: Getting closer to Singapore – Business Standard

– news.google.com

Tehelka<B>Tarun Das:</B> Getting closer to SingaporeBusiness StandardSingapore Prime Minister Lee Hsien Loong has just completed a two-day state visit to India, coming here after seven years, as well as seven months after Prime Minister Manmohan Singh visited Singapore. Progress was made during the Singapore PM’s visit, …

Forex reserves down to $287.62bn: RBI

– http://timesofindia.indiatimes.com/

India’s foreign exchange reserves (forex) plunged by $336.5 million to $287.62 billion in the week ended July 6, data from India’s central bank showed.

India Graft Push Stirs Doubts

– http://online.wsj.com/

Increased scrutiny of bureaucrats, politicians and executives at state-run companies by India’s anticorruption authorities has had a chilling effect on some pending government and company initiatives.

Used car market growth to more than double this year

– http://timesofindia.indiatimes.com/

The slowdown sentiment may have hit new car sales, but the used car market is still in top gear. According to a top industry official, India’s used car market, roughly the same size as the new car market.

India’s strike-hit Kingfisher to resume flights

– http://news.yahoo.com

India’s struggling Kingfisher Airlines said late Saturday its services would return to normal after a strike by employees over long overdue pay forced cancellation of more than three dozen flights.

India plans to clarify controversial tax rules

– http://news.yahoo.com

India says it plans to issue fresh guidelines on sweeping new anti-tax evasion rules as it seeks to reassure rattled foreign investors and attract vital funds from abroad.

Steven Hansen