InvestorQ : Is it true that imports and exports are accounting for most of the GDP growth?
diksha shah made post

Is it true that imports and exports are accounting for most of the GDP growth?

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4 months ago
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This is a trend that is visible in the last few quarters wherein the combination of exports and imports are actually boosting GDP to much higher levels. In fact, one of the big reasons for the overall GDP to show growth over FY20 is the double digit growth that India has shown in terms of exports and imports well in excess of 11% over FY20. Substantive growth in trade has been the one big story in the current fiscal year.

Yes, this does come with upsides and downsides and let me explain what I am trying to get at. While exports have grown over FY20, levels, the rise in imports has resulted in record trade deficit levels, month after month. Now trade deficit is consistently above $20 billion for months in succession and trade deficit could scale $180 billion this fiscal. One big outcome is that record gold imports resulted in 78% rise in the allocation to Valuables.

But the one area of worry is in the private consumption area, which is still nearly -2.9% below the pre-COVID levels of FY20. This is an indicative of two things. Firstly, household financial balance sheets are still under stress due to economic slowdown and job losses hitting people at the same time. Secondly, consumers are very sceptical about too much of consumption spending due to uncertainty and prefer to sit on cash due to Omicron worries.

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