Imports move to positive growth as economic outlook brightens

Imports moved back into positive territory for the first time since the financial crisis, on the back of 27-per cent growth in December, pointing to an economy well on the road to recovery, boosted by rapidly improving exports that grew for the second consecutive month.

According to Crisil chief economist, D K Joshi, trade had fallen in line with all other indicators of the economy that were already improving.

He added that trade was the last indicator to improve as it was linked to the global economy. The strong 22.4-per growth in non-oil imports, following a steady fall for more than a year, reflected an increase in manufacturing and investment activity in the country, as the bulk of imports were industrial inputs and capital goods.

Capital goods contributed nearly 16 per cent to imports in the year 2008-09.

According to analysts, the near double-digit growth in exports in December 2009 from a year ago, though fromed a low base, suggested a demand pick-up in western markets, including in both the US and the EU. The pick up in exports would boost manufacturing, and with it, the overall industrial growth which was a strong 11.7 per cent in November 2009.

Reflecting the revival of local manufacturing sectors and investment activitiy, merchandise imports - that includes non-oil items comprising capital goods - also turned positive for the first time in 12 months in December 2009, growing by 27.2 per cent to $24.75 billion from $19.45 billion in December 2008, according to the data released on Monday by the Commerce and Industry Ministry.