Final year figures are expected to show that trade between China and India suffered a major slump in 2012 despite a softening in political relations between the two countries that have previously clashed over borders.
Bilateral trade between the world’s two emerging economic giants is on target to fall by up to 9 percent in 2012 to around $70 billion. India’s exports to China fell 16 percent in the first 11 months of last year, primarily because of a ban on iron ore exports. China’s exports to India were down more than 6 percent year-over-year in the first 11 months of 2012.
The slump in trade with China is mirrored across India’s key international trading industries. Although China missed its trade growth target of 10 percent in 2012 despite a pickup in the final quarter, India has been affected far more by the slowdown in demand from key U.S. and European markets, which account for more than a third of all Indian goods and services sold overseas. India’s total exports fell 6 percent from April to November 2012 compared to the same period of 2011, despite the rupee declining against the dollar.
India’s exports in the current financial year ending April are expected to be significantly below the target of $360 billion target set by government, with some economists forecasting final year export figures to even fall short of the $300 billion achieved in 2011-12.
Outbound shipments from major export industries such as engineering, jewelry and garments all declined in the first six months of the last financial year.
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