The Latest Evidence That Global Trade Has Collapsed: India's Exports/Imports Plunge By 25%

Tyler Durden's picture

Late last month, India surprised 51 out of 52 economists when the RBI cut rates by 50bps. 

Although economists have a reputation for being terrible when it comes to making predictions (getting it wrong perpetually is almost a job requirement), it’s difficult to understand how 51 of them failed to see a cut of that magnitude in the cards.

After all, it was just a little over a month earlier when the Indian government’s chief economic advisor Arvind Subramanian told ET Now television that India may need to "respond" to China’s monetary policy stance. He also hinted at further export weakness to come.

Here’s what the REER picture and the export picture looked like going into the RBI meeting:

And here’s what Deutsche Bank had to say in August: 

Currency competitiveness is an important factor in influencing exports performance, but global demand is even more important, in our view, to support exports momentum. Global demand remains soft at this stage which continues to be a key hurdle for exports momentum to gain traction. 

Hence the outsized rate cut.

So that's what the picture looked like going into Thursday’s export data and unsurprisingly, the numbers definitively show that global trade is in freefall. Here’s Reuters

India's exports of goods shrank by nearly a quarter in September from a year ago, falling for a 10th straight month and threatening Prime Minister Narendra Modi's goal of boosting economic growth through manufacturing.


India's economy, Asia's third largest, is mostly driven by domestic demand, but the country has still felt the effects of China's slowdown. Exports have dropped and consumer and industrial demand for imports has weakened.


Imports fell 25.42 percent in September from a year earlier to $32.32 billion. Exports stood at $21.84 billion, according to data released by the Ministry of Commerce and Industry on Thursday.


"We see no signs of revival in exports in the near future," said Ajay Sahai, director general of the Federation of Indian Export Organisations. "We will be lucky if exports could even touch $265 billion to $270 billion for the whole year."

So yeah, both exports and imports fell by a quarter. That's right, by a quarter.

And so India finds itself in the same position as many other emerging economies in a world where trade is grinding to a halt: hoping that your own domestic demand for imported goods is even more abysmal than other countries' demand for the goods you export just so the current account doesn't collapse. Here's Reuters again: 

Policy makers were nonetheless relieved, because the trade deficit narrowed to $10.48 billion last month from $12.5 billion in August as gold and oil imports declined. For April-September, the trade deficit shrank to $85.36 billion from 497.17 billion a year earlier, the data showed.

But as Goldman notes, even this dynamic may be set to disappoint because the expected benefit on the deficit from falling commodity prices is not as large as expected due to the fact that India... exports some commodities:

Given the sharp decline in exports, we think the benefits of the commodity price decline on India's trade balance may not be as large as widely perceived due to the significant commodity content within its exports.

The takeaway is this: if you needed further evidence that global trade is in the doldrums and seemingly getting worse by the month, simply see the above. Of course the hope will be that the RBI's easing will boost exports and further narrow the deficit, but again, this is just a race to the bottom with the entire world attempting to out-ease one another in a desperate attempt to stay ahead of the pace at which global demand is contracting. 

There's nothing positive (let alone sustainable) about that.

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williambanzai7's picture

Although, imports of Indian programmers to Silicon Valley are up.

Fahque Imuhnutjahb's picture

Ironically, Gartman was the 1 out of 52 that nailed it---who woulda thunk it?

TheReplacement's picture

Deutsche Bank had to say in August: 

Currency competitiveness is an important factor in influencing exports performance, but global demand is even more important, in our view, to support exports momentum. Global demand remains soft at this stage which continues to be a key hurdle for exports momentum to gain traction. 


So wait, when demand is less than supply the price goes down?  WTF, who thought of this insane idea.  Clearly you have not considered printing moar.  That always make demand greater so price goes up.  Jeez people.  Do we have to fire someone to get some inflation around here?

wizteknet's picture

Thats why I'm going back into coding, show them bastards!

Baby Eating Dingo22's picture

Apartment complexes throughout the East Coast reek of curry

And you needn't look far to see a few shuffling down the street in a sheet and sandals


wizteknet's picture

Curry is ok in moduration, but lay off the heavy f grease sheesh, hate when they afraid of green little chili peppers, punk ruin it all no flavor

Hype Alert's picture

To the moon tomorrow!  This is beyond ridiculous.

GreatUncle's picture

Anybody informed the MSM yet because about 3-4 weeks ago as China was having issues India was wheeled out as the economy that was going to save the world.

kliguy38's picture

Its a recovery now STFU

o r c k's picture

Approaching full employment.

wizteknet's picture

Oh really? hey bob we recovered, bob says what?

buzzsaw99's picture

they should have bought FB & AAPL /s

Atomizer's picture

What next Crony Corporation is going to offer a free $10,000 EBT card with $7,500 Obamacare access within 12 months? This special reward card will build 2% for your next purchase,

Reward card exclusions may apply.

Atomizer's picture

You need to buy a candybar, gum, or a pair of boots offered on a auction line. You'll never know, just keep spending until you win.

ucde's picture

Wow. 25% losses in imports and exports are no joke. That's some scary data right there.

wizteknet's picture

BLAME F CHINA, yeah they yah friends right?! Didnt they still some territory from u?

nosam's picture
nosam (not verified) Oct 15, 2015 11:04 PM

A lot of Indias import is crude oil which is  refined and expoerted back. So some of this is because of the decrease in price in crude even though the physical volumes may be about the same,

The Indian economy is still growing at a healthy 6-7% though because India is not an export based economy.

SmittyinLA's picture

Drones moving into ever smaller living spaces doesn't bode well for the "stuff exporters", bullish Apple your phone is your home.

onmail1's picture

India has plenty of assets such as 20000 tonnes of GOLD.

India produces huge amount of food , more than enough.

India & China are in same situation

But they are dependent on foreign currencies , Dollar, Euro, Yen  WHY?

Just make an eastern coalition (BRICS) bypass SWIFT, stop trading in dollar & euro, trade in local currencies (or barter) Be Happy

Western economies are on verge of collapse , dependence on Dollar & Euro is like putting a rope in your neck & hang yourself.

Global Observer's picture

Just make an eastern coalition (BRICS) bypass SWIFT, stop trading in dollar & euro, trade in local currencies (or barter) Be Happy

A system to bypass all national and regional currencies for internal trade is already set up by the New Development Bank (BRICS bank). They are simply waiting for the next global financial crisis to launch it.


The NDB will issue its own purely electronic currency (likely to be called Bancor) available only to the Central Banks of the participating countries. There would be 3 ways to acquire this currency 1. Sell gold to the bank (at fixed rate in the new currency, say 1000 BNC per troy ounce) 2. Buy it from someone who already has it by selling whatever the current holder is willing to accept (goods/services/another currency) 3. Borrow from the bank (which lends from what it borrows from members holding the currency) or someone who already holds the currency, a nation running export surpluses.


The bank may offer to sell gold, after a specific date, at the same fixed rate that it buys, to those holding net account balances (account balance - loans repayable to the bank). It at once makes the currency 100% exchangeable for gold at fixed rate, since even the initial balances of the member countries will likely be issued for the gold they surrender to the bank. Since the volume of this currency only represents the net-global transfers (which is always zero) and its gold holdings, there is never a need to increase its volume unless some one wishes to buy the currency for gold.


Participating countries will be free to float/fix their national/regional currencies against Bancor (depending on whether they are net exporters/importers and have capital controls or not). There will be one reference currency for golbal trade settlements, gold, exchanged electronically between countries through the bank.


This effectively means net exporting countries like Russia and China will be lending their savings, through the bank, to whoever they choose instead of being forced to lend them to the US/EZ/UK/Japan/Switzerland by holding their currencies. Net importing countries like India, Brazil and South Africa will be borrowing from the surpluses of Russia and China, through the bank, instead of being at the mercy of "investors" from the West to finance their current account deficits. 

hoppingrobot's picture

India already has the fastest and deadliest cruise missile in the world, has just operationalized ICBMs and its first nuclear Ballistic missile sub and the world's best directed energy weapon - KALI (electron beam gun, not a LASER which is inferior). Airborne hypersonic missiles are being tested now. India is now ready to join the Russia-China camp.

BRICS or rather RIC(Russia-India-China) will soon replace the IMF/world bank architecture with a new one. After that its judgement day for the Anglo-Saxons. US will slowly slide into a third world status. RIC will form the new security council with Unified Korea and Iran.

It will be interesting to see how soon a No-fly-zone is imposed over Europe. A lot of regime changes will have to be made. Cities like London will be bombed by RIC to bring in TRUE democracy. And the British should be prepared to watch their Queen(and other royals, and their PM) being hanged in front of the royal palace by the RIC peace-keeping force.

Ending the farcical royal dynasties in Europe and the thugs in Vatican(starting with the Pope) will make this world a better place and unite the world under a RIC Government.