India’s merchandise exports contracted 1 per cent to $38.01 billion in December while imports rose by 4.9 per cent to $59.95 billion leading to a trade deficit of $21.94 billion during the month, according to data released by the commerce department.
The United Nations Trade and Development (UNCTAD) in its Global Trade Update last month said potential shifts in United States (US) trade policy to a more protectionist one, inward looking industrial policies in many countries, threat of renewed and expanded trade wars along with ongoing geopolitical tensions are set to negatively influence international trade in 2025.
Although moderating global inflation, stable economic growth forecasts and improving business activity point to continued positive momentum in global trade for early 2025, UNCTAD projected global trade to grow 3.3 per cent or by $1 trillion in 2024, with both goods and services contributing approximately $ 500 billion each.
Earlier, the World Trade Organization (WTO) revised downwards its projection of world merchandise trade growth to 3 per cent in 2025, from its earlier estimate of 3.3 per cent.
For 2024, the WTO revised upwards its forecast for merchandise trade growth to 2.7 per cent–up slightly from the previous estimate of 2.6 per cent.
However, the multilateral trade body said that risks to the forecast are firmly on the downside due to regional conflicts, geopolitical tensions and policy uncertainty.
In case of an escalation of the conflict in West Asia, the effects would also be felt in other regions, including through further disruptions to shipping and rising energy prices due to higher risk premiums.
“While the disruptive impact of the Red Sea crisis has been contained to date, other routes could be impacted in a wider conflict. There would also be a heightened risk of energy supply disruptions given the region’s prominent role in petroleum production. Higher energy prices would dampen economic growth in importing economies and weigh on trade indirectly,” it said.
The first half of 2024 saw 2.3 per cent year-on-year increase in merchandise trade. The rebound came against the backdrop of a slump in 2023 – of 1.1 per cent – driven by high inflation and rising interest rates.
