Weighed by the impact of COVID-19 outbreak, India's exports to China and Hong Kong together slumped 41 per cent in February while imports declined more than 10 per cent. However, a sudden jump in exports to United States and United Arab Emirates during the month led to India's overall exports turning positive for the first time in seven months.
Official trade data reviewed by Mint showed India’s exports to China dropped 13.7 per cent in February to $1.1 billion while shipments to Hong Kong declined 62.4 per cent to $681 million. Similarly, imports from China due to supply chain disruptions fell 13.3 per cent to $4.4 billion while imports from Hong Kong which was less affected by COVID-19 outbreak picked up 3.7 per cent to $1.1 billion.
Retail sales in China fell by 14 per cent in January and 21 per cent in February combined. International agencies have significantly reduced their growth estimates for China with the rating agency S&P estimating an unprecedented 10 per cent contraction in China’s economy in January-March quarter while 2020 calendar year growth projection for the world’s second largest economy has been slashed to 2.9 per cent from 4.8 per cent for 2020.
According to Crisil if the pandemic is not contained soon, China’s demand for cotton, iron ore, and petroleum products from India is likely to suffer. Imports related to pharmaceuticals, automobiles, consumer durable, electronics and telecom/ smartphone equipment could also bear the brunt, hurting these sectors domestically.