Export slows down
- January 17, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Export slows down
Subject: Economy
Section: External Sector
Details: India exported goods worth $34.48 billion in December 2022, constituting a 7.75% rise from November’s $32 billion figure but a steep 12.2% dip from a year ago. Imports also contracted 3.5% to $58.2 billion from $60.33 billion a year ago.
Reasons for slowdown
- Base effect: High base effect is said to be the main reason behind the slow growth.
If we take any data point or index, it is often contextualised by comparing it with a reference point, which is usually the same period of last year or the previous month. Now, this reference point or base can have an effect on the result of the comparison, and this phenomenon is commonly referred to as base effect. If the base for which the comparison is made is high, then the outcome is a result of a high-base effect and vice-versa.
- Global slow down: According to various estimates the world particularly developed world is going into recession.
Trade deficit
- Trade deficit or negative balance of trade (BOT) is the gap between exports and imports.
- When money spent on imports exceeds that spent on exports in a country-a trade deficit occurs.
- The opposite of a trade deficit is a trade surplus.
- India tends to have a trade deficit every year because it imports far more (in terms of value, measured in $) than it exports.