India’s exports set to boost as WTO raises trade outlook
India’s export growth prospects are expected to be boosted by the latest World Trade Organization (WTO) report which now forecasts better prospects for world merchandise trade for 2021 compared to its earlier projections.
India’s exports to major trading partners such as United States, European Union, West Asian countries, among others, are expected to increase. Data on exports in the first six months of the current fiscal year is indicative of the robustness of external demand.
India’s exports have grown steadily in recent quarters, after dropping for a few months as the Covid-19 outbreak disrupted global trade.
India exported $ 33.44 billion worth of goods in September, up 21.35% year-on-year. This jumped 28.51% from September 2019. From April to September, outbound shipments worth $ 197.11 billion were exported, up nearly 57% year-on-year . It has also reached almost half of the government’s export target of $ 400 billion.
Experts said that with increasing global demand, India should be able to compete in various segments vis-à-vis China.
“Currently, China is facing supply and demand problems due to several internal challenges (energy, debt crisis). Therefore, India is in a good position to increase its exports and can become a substitute for China in various product categories or sectors, ”said DK Srivastava, Chief Policy Advisor, EY India.
India can take advantage of growing global demand, which can ultimately translate into demand for Indian exports, he said.
According to a WTO report released on Monday, world merchandise trade is expected to grow 10.8% from the forecast of 8% in March, but with a recovery that varies by region.
The report states that the export volume growth in 2021 will be 8.7% in North America, 7.2% in South America, 9.7% in Europe, 0.6% in the Commonwealth of Independent States ( CIS), 7 percent in Africa, 5 percent in West Asia and the highest for Asia at 14.4 percent.
In contrast, imports are expected to grow at a faster rate than exports. Inbound shipments to North America are forecast to increase 12.6 percent. It will be 19.9% in South America, 9.1% in Europe, 13.1% in the CIS, 11.3% in Africa, 9.3% in Western Asia and 10.7% in Asia.
While growth looks better in 2021 due to a weak base effect caused by the outbreak of the pandemic, the recovery looks patchy from 2019. During this period, export growth will be negative in North America , in the CIS, West Asia and Africa. Positive growth is observed in Asia, Europe and South America at 14.7%, 1% and 2.2%, respectively.
The report also highlighted spikes in inflation, longer port delays, higher shipping rates and prolonged semiconductor shortages as some of the risks associated with the forecast.
In addition, supply side disruptions can also be exacerbated by the rapid and surprisingly strong recovery in demand in advanced economies and many emerging economies.