Export growth slowed to a five-month low in August because of the downturn in euro zone, but lower oil imports helped moderate trade deficit to the least in three months and strong non-oil imports validated prospects of economic recovery. August exports rose 2.35% while imports were up 2.08% despite 14.97% decline in oil imports. Trade deficit amounted to $10.7 billion, lower than $12.2 billion in the previous month.
Non-oil, non-gold imports registered 8% growth in August. The economy expanded by a nine-quarter high of 5.7% in the first three months of the fiscal. Engineering and readymade garments continued double-digit growth run, expanding by 22% and 23%, respectively.
Oil imports fell because of softer crude prices, which also dented India's petroleum exports that dropped 13% in value terms. Crude hovered around $100 per barrel last month, against $114 per barrel in August 2013. Brent dropped to around near $96 per barrel on Monday. The government is expected to announce a five year foreign trade policy for 2014-19 by end of September that will not only focus on enhancing exports, but also boosting domestic manufacturing.
Pharma exports slowed to 7% in August against 10% in the previous month. The first five months of the fiscal saw a 7.31% growth in outbound shipments.
Gems and jewellery exports contracted by 10.31% in August. Gold imports shot up 175% in August to $2 billion from $0.7 billion a year earlier. The rebound was due to the relaxation of some of the imports curbs placed last year.
Services exports showed a trade surplus of $6.5 billion in July against $ 5.7 billion in June.
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