Imports and Exports Essay is very important in professional scenario as it checks the economic knowledge of a candidate. Imports and exports may seem like terms that have little bearing on everyday life, but they exert a profound influence on the consumer and the economy. In today’s interlinked global economy, consumers are used to seeing products and products from every corner of the world in their local malls and stores. These overseas products or imports provide more choices to consumers and help them manage strained household budgets.
But too many imports in relation to exports which are products shipped from a country to foreign destinations can distort a nation’s balance of trade and devalue its currency. The value of a currency, in turn, is one of the biggest determinants of a nation’s economic performance. It’s important that we learn how these mundane staples of international trade have a more far-reaching influence than most people imagine.
India’s export and import figures for May 2015 reflect the subdued economic scenario both globally and within the country. India’s exports contracted 20.2 per cent to $22.3 billion from what they were in May 2014, while its imports were down 16.5 per cent over the same period.
India’s exports and imports have both contracted for six consecutive months, that is, from December 2014 onwards. Looking at the previous year, the December 2013 to May 2014 period also saw a continuous contraction in imports
If exports exceed imports, the net exports figure would be positive, indicating that the nation has a trade surplus. If exports are less than imports, the net exports figure would be negative, and the nation has a trade deficit.
Gold imports increased 10.5 per cent over their May 2014 figures, but this is far lower than the 78.3 per cent growth seen in April. In fact, in absolute terms, the $2.4 billion of gold imports in May were a three-month low. The increase in the value of gold imports was driven more by volumes than by the price of gold.
Conversely, imports are considered to be a drag on the economy, as can be gauged from the GDP equation. Imports represent an outflow of funds from a country since they are payments made by local companies (the importers) to overseas entities (the exporters).
Overall, it is important to note that the ongoing contraction of imports and exports is an indication of subdued global and Indian demand.
A healthy economy, then, is one where both exports and imports are growing, since this typically indicates economic strength and a sustainable trade surplus or deficit. If exports are growing nicely, but imports have declined significantly, it may indicate that the rest of the world is in better shape than the domestic economy. Conversely, if exports fall sharply but imports surge, this may indicate that the domestic economy is faring better than overseas markets.
Imports and exports exert a major influence on the consumer and the economy directly, as well as through their impact on the domestic currency level, which is one of the biggest determinants of a nation’s economic performance.
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