Even though world economic growth rates are not expected to increase significantly from 2016 to 2017; as per the IMF’s latest forecasts growth will be only 30bps higher at 3.4% in 2017 from 3.1% in 2016, there seems to be a definite upturn for India.
And to note that, you don’t have to look farther than India’s merchandise exports numbers for February 2017. During the month, exports grew at the fastest in 64 months at 17.5%, despite a sharp come off in base effect. Exports had declined by 5.2% in February 2016, more than halving from from the 13.1% decline in January 2016. Even in absolute terms, exports stood at USD 24.5bn, which is almost 10% higher than the average 2016-17 level so far.
The latest data point is particularly significant, not just because of the extent of increase, but also the fact that it strongly underlines the turnaround in exports that started in September 2016 after almost 21 months of decline (save one month). But in none of the previous months of turnaround has growth been this fast – averaging at 5.3% from September 2016 to January 2017.
Another data point related to India’s external economy – foreign tourist arrivals, continues to grow at a fast clip. Even though in February 2017, the pace slowed down to 12.9%; arrivals have grown at double digit rates for 8 of 11 months in 2016-17 so far.
The upshot is that the external economy is bringing in some good news, and if the world growth forecasts are to be believed, this situation should only improve.