Imports rise 27%, confirm economy back on track
Economic Times, February 2, 2010, Page 9
22.4% Rise In Non-Oil Imports In Dec Reflects Manufacturing Growth
Our Bureau NEW DELHI
IMPORTS moved back to the positive terrain for the first time since the financial crisis, clocking a 27% growth in December, indicating that the domestic economy was well on its way to recovery, aided by rapidly improving exports that grew for the second successive month.
“Trade has now fallen in line with all other indicators of the economy that had already started improving,” said Crisil chief economist D K Joshi, adding that trade was the last indicator to improve as it is linked to the global economy. The strong 22.4% rise in non-oil imports, after a steady fall for more than a year, reflects an increase in manufacturing and investment activity in the country, as the bulk of imports is industrial inputs and capital goods.
Capital goods accounted for nearly 16% of imports in the year 2008-09.
The near double digit growth in exports in December 2009 from a year ago, albeit from a low base, suggests a demand pick-up in the Western markets, including both the EU and the US.
The pick up in exports should boost manufacturing and thereby the overall industrial growth, which was a strong 11.7% in November, 2009.
This (rise in non-oil imports) coupled with the recovery in exports bodes well for the growth momentum,” said Citi economists Rohini Malkani and Anushka Shah in a research note. The recently provided additional stimulus to labour-intensive export sectors that had not responded well to the packages announced earlier is also expected to contribute to positive growth.
“We believe that exports would keep moving uphill and we can touch $170 billion by the end of the fiscal,” said Ajay Sahai, director general, Federation of Indian Export Organisations (Fieo).
There is an increase in import of both capital goods for manufacturing in general and power equipment as the country is implementing a large number of power projects.
“This is a good sign as it indicates that manufacturing will continue to post a double digit growth that will ultimately result in a higher GDP,” Mr Sahai added.
Oil imports in December 2009 stood at $6.5 billion, 42.8% higher than $ 4.58 billion in the corresponding period last year. India’s exports had turned positive in October 2009 after falling continuously for 13 months. Imports, which had slipped into the negative territory a little later, took that much longer to recover and post a postive growth.
Due to a higher increase in imports in December 2009, the trade deficit widened to $10.1 billion, which is the highest since November 2008. Trade deficit for the nine month period narrowed to $76.2 billion, compared to $106 billion last year.
Economic Times, February 2, 2010, Page 9
22.4% Rise In Non-Oil Imports In Dec Reflects Manufacturing Growth
Our Bureau NEW DELHI
IMPORTS moved back to the positive terrain for the first time since the financial crisis, clocking a 27% growth in December, indicating that the domestic economy was well on its way to recovery, aided by rapidly improving exports that grew for the second successive month.
“Trade has now fallen in line with all other indicators of the economy that had already started improving,” said Crisil chief economist D K Joshi, adding that trade was the last indicator to improve as it is linked to the global economy. The strong 22.4% rise in non-oil imports, after a steady fall for more than a year, reflects an increase in manufacturing and investment activity in the country, as the bulk of imports is industrial inputs and capital goods.
Capital goods accounted for nearly 16% of imports in the year 2008-09.
The near double digit growth in exports in December 2009 from a year ago, albeit from a low base, suggests a demand pick-up in the Western markets, including both the EU and the US.
The pick up in exports should boost manufacturing and thereby the overall industrial growth, which was a strong 11.7% in November, 2009.
This (rise in non-oil imports) coupled with the recovery in exports bodes well for the growth momentum,” said Citi economists Rohini Malkani and Anushka Shah in a research note. The recently provided additional stimulus to labour-intensive export sectors that had not responded well to the packages announced earlier is also expected to contribute to positive growth.
“We believe that exports would keep moving uphill and we can touch $170 billion by the end of the fiscal,” said Ajay Sahai, director general, Federation of Indian Export Organisations (Fieo).
There is an increase in import of both capital goods for manufacturing in general and power equipment as the country is implementing a large number of power projects.
“This is a good sign as it indicates that manufacturing will continue to post a double digit growth that will ultimately result in a higher GDP,” Mr Sahai added.
Oil imports in December 2009 stood at $6.5 billion, 42.8% higher than $ 4.58 billion in the corresponding period last year. India’s exports had turned positive in October 2009 after falling continuously for 13 months. Imports, which had slipped into the negative territory a little later, took that much longer to recover and post a postive growth.
Due to a higher increase in imports in December 2009, the trade deficit widened to $10.1 billion, which is the highest since November 2008. Trade deficit for the nine month period narrowed to $76.2 billion, compared to $106 billion last year.
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