FCS Global

Singapore's export growth slows in July:

Singapore's non-oil domestic exports (NODX) grew by 5.8 percent year on year in July, following the 6.6 percent increase in the previous month, trade promotion agency International Enterprise Singapore said Friday.

The electronic exports increased by 2 percent, largely due to the rise in exports of telecommunications equipment, integrated circuits and parts of integrated circuits. The non-electronic domestic exports grew by 7.9 percent, thanks to strong growths in exports of specialized machinery, petrochemicals and printed matter, reported Xinhua.

The NODX exports to the US fell by 15.6 percent, while exports to the European Union and Japan fell by 1.5 percent and 7 percent, respectively.

The NODX exports to China expanded by 8.3 percent, compared with a contraction of 3.4 percent in June.

On a month-on-month basis, the NODX fell by 3.6 percent in the month, compared with the expansion of 6.7 percent in June, largely due to the decline in non-electronic NODX outweighing growth in electronic NODX.

Total exports grew by a marginal 0.3 percent in July, compared to a 0.5 percent decline in the previous month. Total trade grew by 2.9 percent in July year on year, following an increase of 2.7 percent in June.

'Inflation, high interest rates eating into exports'

As Inflation and high interest rates have eaten into the advantage that may have accrued to exporters due to depreciation of rupee, the government needs to press the emergency button for saving Indian exports in a highly depressed European markets and slowing US economy, an ASSOCHAM study said.

"While rupee depreciated by about 25 percent in the last one year, the inflation based on the wholesale price index remained around eight percent. In real terms, the impact of rising price was much more. The situation got further compounded with the export credit staying expensive as the RBI refused to lower the interest rates," the study said.

It is in this context that the government needs to do a reality check along with the exporters and set realistic targets. According to an assessment done by ASSOCHAM, the export target of USD 360 billion for the fiscal 2012-13 is not achievable given the present global economic situation.

"We would be lucky if we are able to reach the level of the previous year at USD 304 billion ," the study pointed out.

It might even decelerate well below USD 300 billion, the study cautioned adding a new realistic target should be set.

For the long term, the strategy earlier devised by the Commerce Ministry to achieve exports of USD 500 billion by the end of 2013-14 should certainly be changed. ASSOCHAM suggested that the exports sector be given maximum incentives if we want to sustain jobs in several labour-oriented sectors like gems and jewellery and handicrafts.

The government should immediately announce incentives for the exports sector. The duty drawback rates should be revised upward and the rate of export credit should be significantly reduced, if we have to even sustain the exports achieved last year, the study said.

Moreover, the government should speed up talks on the Free Trade Agreement with the European Union so that the Indian exporters get duty-free or concessional access to the vast European market, ASSOCHAM President Rajkumar N Dhoot said.

Exports registered a small growth of 3.2 percent in April this fiscal and the situation worsened in May and June. The shipments decelerated by 4.16 percent in May to USD 25.68 billion and by 5.45 percent in June to USD 25 billion.

For the first quarter of April-June, the exports were down by 1.7 percent to USD 75.2 billion dollar, from 76.5 billion dollar in the same period last fiscal.