How does Indian trade look after World Bank and IMF’s rating on global growth outlook?

The World Bank and the IMF have downgraded their global growth outlook. Majority of India’s close trading partners confront sluggish growth at home. More preventing measures to prop up the trade sectors are on the table, though might provide short-term relief to the external sector but they are no universal remedy. But this balances off with some positive news on the inflation front.

Factoring in the drop in Mar, India’s exports shrank 15.9% in FY15/16 weighed by weak global demand, falling commodity receipts and real rupee strength. This partly blunted the boost from 15.3% plunge in imports which narrowed the trade deficit to USD 118.5bn from USD 138bn the year before.

This draws the curtain on a dire year for the external sector. But the storyline is quite the same for rest of the region, as manufacturing and export markets face recessionary conditions. Looking ahead, India’s exports are unlikely to improve in a hurry due to its close correlation with global imports.

Out yesterday, Mar WPI inflation fell 0.85% YoY, little changed from -0.9% in Jan-Feb. The headline fall however overshadowed the uptick on sequential basis (MoM, nonseas adjusted).

Nonetheless, with Mar’s annual fall, WPI readings have been in red for 17 straight months. This has been the longest streak of negative readings for this series that has run for more than a decade.