Hindi English Translation || Editorial || Trade worries: On the expanding trade and current account deficits

Trade worries: On the expanding trade and current account deficits

The burgeoning (तेजी से बढ़ना) trade deficit (घाटा) is set to swell the current account deficit

July’s provisional trade data should trigger (उत्तेजित करना) early warning signals among policymakers, as the first year-on-year contraction in exports in 17 months, albeit (यद्यपि) marginal, and a 44% jump in imports, sharply widened the trade deficit to a third successive monthly record. The export performance is of concern (चिंता, प्रसंग), reflecting a slowdown in overseas demand for Indian merchandise (उत्पाद), the competitive advantage gained by the rupee’s sizeable depreciation against the U.S. dollar notwithstanding. While the Commerce Ministry has sought to explain away the 0.8% slide in last month’s exports as largely being a result of inflation-control curbs, the Ministry’s preliminary disaggregated data suggest several key sectors including engineering goods, gems and jewellery, garments and yarn and textiles, and drugs and pharmaceuticals, which were mostly outside the purview (उत्पाद) of those measures, also suffered contractions. And viewed on a sequential basis, the slide in exports from June’s level is a disconcerting 12.2%. Engineering goods, which at more than 26% represented the largest share of merchandise shipped overseas in July, contracted 2.5% from a year earlier and also shrank 2.9% sequentially. Even granting that the Government’s introduction in late May of a stiff export tax on a range of steel products, with a view to boosting their domestic availability and cooling price gains, was likely to have constrained (विवश करना, बाधित करना) exports of this segment of engineering goods, the contraction (संकुचन, सिकुड़न) in the broad category points to a clear slowdown in demand in the advanced economies.

The latest S&P Global PMI data from the U.S. and the eurozone for economic activity in July is also far from reassuring. As per the PMI data, output across Europe’s major economies sharing the euro as common currency shrank (Become or make smaller in size or amount) for the first time since February 2021 as a worsening manufacturing downturn combined with a slowdown in the service sector to drag the composite index into contraction territory. The U.S. economy, which has now contracted for two successive quarters putting it on the edge of a recession, saw manufacturing PMI post its lowest reading in two years as output and new orders declined in July. Given that the U.S. and the eurozone combined consumed almost a third of India’s goods exports in the last fiscal year, the prospect of July’s export slowdown deepening as demand in these markets weakens appears increasingly more likely. Imports continued to expand at a robust clip, driven largely by the expanding domestic demand for essentials including crude oil, coal, edible oils and electronic items. Coal and coke alone exceeded $5.1 billion. The augury (भविष्यवाणी) from the trade data is that the external sector faces increasing vulnerability as the burgeoning trade deficit is set to swell the current account deficit, adding pressure on the rupee at a time when portfolio investments from overseas have been negative, and foreign direct investment has been significantly weaker.

Courtesy: The Hindu

Important Word List With Meaning

1.Deficit (Noun)

Hindi Meaning - घाटा
English Meaning - Shortage of something required

2.Burgeoning (Adjective)

Hindi Meaning - तेजी से बढ़ना
English Meaning - beginning to grow or increase rapidly; flourishing.

3.Trigger (Verb)

Hindi Meaning - उत्तेजित करना
English Meaning - Cause to happen

4.Albeit (Conjunction)

Hindi Meaning - यद्यपि
English Meaning - Though

5.Concern (Noun)

Hindi Meaning - चिंता, प्रसंग
English Meaning - A matter that calls for a person’s attention.

6.Merchandise (Noun)

Hindi Meaning - उत्पाद
English Meaning - Goods to be bought and sold.

7.Purview (Noun)

Hindi Meaning - क्षेत्र
English Meaning - The scope of the influence or concerns of something.

8.Constrained (Verb)

Hindi Meaning - विवश करना, बाधित करना
English Meaning - Compel or force (someone) to follow a particular course of action.

9.Contraction (Noun)

Hindi Meaning - संकुचन, सिकुड़न
English Meaning - the process of becoming smaller.

10.Augury (Noun)

Hindi Meaning - भविष्यवाणी
English Meaning - something believed to be a sign or warning of a future event

11.Shrank (Verb)

English Meaning - Become or make smaller in size or amount.