The massive improvement in the country's export numbers in July is led by a full 78 per cent spike in shipments to China and other Asian economies which had successfully contained the pandemic, constituting 16 per cent of the overall exports basket, says a report.
The pace of exports decline slowed to -10.2 per cent in July from a massive -60.2 per cent in April when the nation was under a strict lockdown due to the COVID-19 pandemic.
Since then the pace of contraction has been steadily declining as the economy began to open up. Contraction in shipments improved to 50 per cent in May and 30 per cent in June.
"While July shipments to China jumped a full 78 per cent, the same to Malaysia jumped 76 per cent, Vietnam (43 per cent) and Singapore (37 per cent). Most of these economies had flattened the pandemic caseload curve in this period. East Asian economies constitute 16 per cent of our export basket," a Crisil report said on Friday.
What is more noteworthy is that these countries has flattened the pandemic curve much earlier that other economies, noted the report.
"Exports growth in the pandemic-dominated world is inversely related to the rise in the pandemic caseloads in its export destinations. Stated differently, exports are flowing back to economies that have checked the affliction. That explains why, exports to certain economies are looking up, while overall exports per se are still declining, though at a slower pace," according to Crisil house economists Dharmakirti Joshi and Pankhuri Tandon.
In contrast, exports declined to Western economies such as the US, Brazil and Britain which saw a much higher caseload and were struggling to control it, they argued.
While exports to the UAE plunged -53.2 per cent, the same to to Britain contracted by 38.8 per cent, and to the US was a minus 11.2 per cent and to Brazil at -6.3 per cent.
This means that export prospects for this fiscal will pivot on the trajectory of the pandemic across countries. It will rise to those countries which have controlled their caseload and restarted activity.
China is a case in point, as it entered and controlled the pandemic much earlier than others.
As a result its economy grew 3.2 per cent in the June quarter, in contrast to sharp declines reported in other major economies.
A closer look at the export numbers show that the growth is led by industrials and agri items -- iron ore over 63 per cent, rice close to 33 per cent, spices 23 per cent, organice and inorganic chemicals over 19 per cent, fisheries 11 per cent and pharma close to 10 per cent.
Significantly, inward shipments from China have been contracting massively since the beginning of the year reaching -60 per cent in June bringing down trade deficit with the world's largest exporting nation to around USD 10 billion in June from close to USD 50 billion in January.