March 15, 2024: India’s resilience in the face of global uncertainties is exemplified by its robust merchandise exports, which have reached a historic high in the current financial year. Despite challenging economic conditions worldwide, India recorded its highest-ever goods export figure for February, soaring to USD 41.40 billion, marking a significant 12% year-on-year growth. This remarkable performance underscores the nation’s ability to navigate turbulent waters and underscores its position as a key player in the global trade arena.
Recovery in Labour-Intensive and Manufacturing Exports
The relieving aspect of this export growth is that it is mostly driven by exports from labour-intensive and manufacturing industries such as textiles, handicrafts, and plastics. Certain sectors within textiles (RMG, yarns, and fiber), which experienced a YoY decline of 10% in their exports throughout the current FY, have shown a positive growth of 6% in the month of February. Plastic & Linoleum is another sector where exports were declining by 5% throughout the financial year; however, exports for the month of February have turned positive by 22%. Organic and inorganic chemicals have also shown remarkable recovery in the month of February, with a growth of 33% compared to a 7% decline in the financial year.
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Positive Outlook and Economic Implications
With merchandise exports showing improvement in the latter half of the financial year, along with resilience in remittances and a surplus in service trade, India’s current account balance should not exceed 1% of its GDP in the worst-case scenario. Additionally, trade figures suggest increasing economic activity in India’s manufacturing sector, reflected in the rise of both non-oil and non-gems and jewellery imports and exports.