Global trade policy disruptions and rising domestic cost pressures are set to expose India’s economic vulnerability to a slowdown in world demand, according to the Global Trade Research Initiative (GTRI). The trade-focused think-tank cited the World Trade Organization’s latest Goods Trade Barometer, which signals an unmistakable cooling in global merchandise trade.
The WTO report, released earlier this week, shows that global trade—buoyed earlier this year by strong demand for AI-related goods—has begun to lose steam as tariff-driven “front-loading” fades and protectionist measures reappear. While components such as electronics, air freight, container shipping and automobiles still point to expansion, their growth has slowed significantly. Agricultural raw materials have slipped below trend, GTRI noted.
“The warning is blunt: growth remains intact for now, but rising tariffs and policy uncertainty threaten to erode global trade volumes in 2026,” the think tank said.
India’s Exports Mirror Global Slowdown, With Sharper Downsides
India’s export performance in October reflects this deceleration—only more sharply. Merchandise exports contracted 11.8% year-on-year, with declines recorded in 15 of India’s 20 major markets, underscoring the fragile demand environment confronting Indian exporters.
Key destinations saw weakening shipments: the United States (-8.6%), the UAE (-10.2%), the UK (-27.2%), Italy (-27.7%) and the Netherlands (-22.8%). Exports to Singapore and Australia witnessed steep declines, signalling a sudden loss of momentum in Asia-Pacific supply chains.
Export growth came from only a few markets—chiefly Spain and China—driven predominantly by energy- and commodity-linked shipments rather than robust manufacturing performance.
‘Not a Collapse, but a Clear Loss of Traction’
GTRI emphasised that India’s export data, much like the global picture, does not point to a collapse but to a “clear loss of traction.” The combination of global trade-policy shocks and domestic cost pressures could expose India to deeper vulnerabilities as global demand weakens.
