Trade Talks - India’s Real Exports Decline ~19% YoY In October: Motilal Oswal

Motilal Oswal Report

In continuation with our detailed analysis of India’s trade to understand the impact of inflation on nominal trade data, we found that India’s real exports continued to contract but real imports grew in October 2022.

This implies that global demand (or domestic production) is extremely weak. However, domestic demand (excluding inflation) still stands relatively strong, especially after the contraction witnessed in Sep-22. 

Nominal exports declined for the first time in 20 months by 16.7% YoY in Oct-22, while imports grew 5.7% YoY (albeit slower than up 8.7% YoY in Sep-22).

Hence, India’s foreign trade deficit stood at $26.9 billion during the month, slightly higher than Sep-22 but sharply above $17.9 billion in Oct-21. 

Based on 28 major commodities, each accounting for more than 90% of exports and imports, our calculations suggest that India’s real exports contracted 19.3% YoY in Oct-22 – the fastest decline in 29 months but real imports grew 1.4% YoY after contracting 8.6% YoY in Sep-22.

Notably, the inflation impact is much lower in Oct-22 than it was in the previous few months as the prices of most commodities exported and imported have either contracted/contracted faster/grown slower in Oct-22.

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