India exports may take hit as WTO pegs global trade at 9-year low

Chennai: A quarterly leading indicator of world merchandise trade slumped to its lowest reading in nine years and should put policymakers on guard for a sharper slowdown if trade tensions continue, the World Trade Organization (WTO) has said.

If the global trade slows down, as per WTO’s estimations, reports stated India’s exports might face repercussions.

The WTO’s quarterly outlook indicator, to gauge global trade for January-March, 2019, comprising seven trade parameters, such as merchandise trade volume in the previous quarter, export orders, international air freight, container port throughput, car production and sales, electronic components and agricultural raw materials, stood at 96.3, the lowest since March 2010 and down from 98.6 in November. A reading below 100 means below-trend growth in trade.

“The most recent WTO reading of 96.3 is the weakest since March 2010 and below the baseline value of 100 for the index, signalling below-trend trade expansion into the first quarter (of 2019),” the WTO said in a statement.

“This sustained loss of momentum highlights the urgency of reducing trade tensions, which together with continued political risks and financial volatility, could foreshadow a broader economic downturn,” the WTO said.

The WTO forecast last September that global trade growth would slow to 3.7 per cent in 2019 from an estimated 3.9 per cent in 2018, but there could be a steeper slowdown or a rebound, depending on policy steps, it said.

“Indices for export orders (95.3), international air freight (96.8), automobile production and sales (92.5), electronic components (88.7) and agricultural raw materials (94.3) have shown the strongest deviations from trend, approaching or surpassing previous lows since the financial crisis,” the WTO said.

According to reports, though India is largely dependent on domestic markets, exports would be hit if there is a slowdown in world trade as the country requires additional support from the external sector to grow the economy higher than 7.5 per cent.

There are positives too
However, the WTO also had positives in its index as the container port throughout remained relatively buoyant at 100.3. The statement said that may have been influenced by a front-loading of shipments before an anticipated hike in US-China tariffs.

Greater certainty and improvement in the policy environment could bring about a swift rebound in trade growth, the WTO said, coming up with a solution for the current scenario.


On course?
Exports from India rose 3.74 per cent in January and was at a three-month high. Exports rose 0.8 per cent in November and 0.3 per cent in December last year. It must be noted that government officials were hopeful of hitting the $350 billion mark this financial year.

Praveen Kumar S