India’s export growth prospects are likely to get a boost from the World Trade Organization’s (WTO) latest report that now sees a brighter global merchandise trade outlook for 2021 compared to its earlier projections.
India’s exports to its top trading partners such as the US, European Union, nations in West Asia, among others, are expected to rise. Exports data during the first six months of the current fiscal year is emblematic of the fact that external demand has been robust.
Exports from India have been rising consistently over the last few quarters, after plummeting for a few months as the outbreak of Covid-19 disrupted global trade.
India exported goods worth $33.44 billion in September, up 21.35 per cent year-on-year. This witnessed a 28.51 per cent jump over September 2019. During April-September, outbound shipments worth $197.11 billion were exported, up nearly 57 per cent YoY. It also hit nearly half of this fiscal’s export target of $400 billion set by the government.
Experts said with rising global demand, India should be able to compete in various segments vis-a-vis China.
“Currently, China is facing supply-side as well as demand-side issues owing 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 across various product categories or sectors,” said DK Srivastava, chief policy advisor, EY India.
India can take advantage of the increasing global demand, which can ultimately translate into demand for Indian exports, he said.
According to a WTO report released on Monday, global goods trade is expected to grow by 10.8 per cent compared to the forecast of 8 per cent in March, but with varied recovery, depending on the region.
The report said export volume growth in 2021 will be 8.7 per cent in North America, 7.2 per cent in South America, 9.7 per cent in Europe, 0.6 per cent in the Commonwealth of Independent States (CIS), 7 per cent in Africa, 5 per cent in West Asia and the highest for Asia at 14.4 per cent.
On the other hand, imports are expected to grow at a faster pace as compared to exports. Inbound shipments into North America are set to grow by 12.6 per cent. It will be 19.9 per cent in South America, 9.1 per cent in Europe, 13.1 per cent in CIS, 11.3 per cent in Africa, 9.3 per cent in West Asia and 10.7 per cent in Asia.
While growth looks better in 2021 due to a low-base effect caused by the outbreak of the pandemic, recovery looks uneven as compared with 2019. Over that period, export growth will be negative in North America, CIS, West Asia and Africa. Positive growth is seen in Asia, Europe and South America at 14.7 per cent, 1 per cent and 2.2 per cent, respectively.
The report also pointed out spikes in inflation, longer port delays, higher shipping rates, and extended shortages of semiconductors, as some of the risks associated with the forecast.
Besides, supply-side disruptions can also be exacerbated by the rapid and unexpectedly strong recovery of demand in advanced and many emerging economies.
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