Consumer Psyche

Imports moved back to the positive terrain for the first time since the financial crisis, clocking a 27% growth in December,indicating that the domestic economy was well on its way to recovery, aided by rapidly improving exports that grew for the second successive month.

“Trade has now fallen in line with all other indicators of the economy that had already started improving,” said Crisil chief economist D K Joshi, adding that trade was the last indicator to improve as it is linked to the global economy. The strong 22.4% rise in non-oil imports, after a steady fall for more than a year, reflects an increase in manufacturing and investment activity in the country, as the bulk of imports is industrial inputs and capital goods.

Economic Times reports capital goods accounted for nearly 16% of imports in the year 2008-09. The near double digit growth in exports in December 2009 from a year ago, albeit from a low base, suggests a demand pick-up in the Western markets, including both the EU and the US. The pick up in exports should boost manufacturing and thereby the overall industrial growth, which was a strong 11.7% in November, 2009.