Even as the country struggles to get the balance of trade into the positive territory, global bank HSBC said the country’s imports will rise faster than the exports in the next five years.
“India’s import growth will overtake its export growth in the next five years. The forecast is consistent with a developing global shift where traditionally export-driven emerging markets will become global trade hubs and important facilitators of international economic growth,” HSBC said in a report.
According to the bank, the country’s imports will grow at an average of 7 percent annually over the next five years, dwarfing the export growth, which is estimated at 5 percent. World Trade Organisation said the country’s exports grew 2.1 percent to $78.64 billion in the January-March period this year versus the 21.8 percent growth in imports to $ 122.47 billion.
The slowdown in export growth is attributed to issues with the global economic environment while the elevated crude oil prices have meant the imports are also high.
This has put a strain on the current account deficit, which was at its widest at 4.3 percent for FY12 and is seen as one of the factors contributing to the recent fall in rupee.
HSBC also predicted that the country will be the fastest growing importer and exporter in the next five years. It said their exports to China will grow at an average of 8 percent till 2016, while imports will be up 11 percent.
Among the emerging trade corridors, HSBC said the country’s exports to Malaysia, Vietnam and Indonesia are expected to grow at around 11 percent while those to Nigeria and UAE will be up by 10 percent.
On the imports front, Oman will lead with a growth of 15.7 percent, followed by Brazil at 14 percent, it said. The HSBC report, titled ‘Global Connections’, also said confidence in India has fallen in the last six months, citing its trade confidence index.