Amid weak demand in Western countries, India’s goods trade gap widened sharply to $30 billion in August in the wake of a 9 per cent decline in exports and a 3 per cent increase in imports, which has pushed up the trade deficit to a nine month high, data released by the Ministry of Commerce and Industry on Wednesday showed.
While goods exports in August this year totalled $34.71 billion compared to $38.28 billion in August 2023, goods imports stood at $64.36 billion compared to $62.30 billion in August last year. This has pushed the goods trade deficit to $30 billion, highest in nine months.
The World Trade Organisation (WTO) Goods Trade Barometer earlier this month said that global trade could improve in the second half of the year. However, shifting monetary policies in advanced economies and weakening export orders continue to create uncertainty .
Commerce Secretary Sunil Barthwal stated that India’s petroleum exports have been affected due to the decline in oil prices caused by the slowdown in China, even as this benefits imports. He also noted that global trade continues to face challenges, with the procurement of rough diamonds being affected by sanctions on Russia.
However, cumulative exports are rising, and a number of measures are being implemented, such as improving trade with African markets and not relying solely on advanced countries, which are experiencing a slowdown. The Ministry of Commerce and Industry is also collaborating with the Ministry of Shipping to resolve issues such as container shortages faced by exporters.
Recent trade data in value terms show weaker-than-expected performance in Europe, while other regions have experienced stronger growth, the WTO noted. The International Monetary Fund (IMF) in May stated that Europe’s recovery, driven by domestic demand, is firmly on track, although inflation remains elevated in several European countries, necessitating a careful and measured approach to monetary policy easing.
The current value of the WTO Goods Trade Barometer, an early indicator of the trajectory of merchandise trade volume, stands at 103—above both the quarterly trade volume index and the baseline value of 100.
“This suggests that merchandise trade has been picking up in the third quarter of 2024. However, the outlook remains uncertain due to shifting monetary policies in advanced economies and weakening export orders,” the WTO stated.
Following a flat period since the final quarter of 2022, world merchandise trade volume began to rise in the fourth quarter of 2023 and gained momentum in the first quarter of 2024, according to the global trade body.
“Trade in the first quarter of 2024 was up by 1 per cent compared to the previous quarter, and 1.4 per cent year-on-year. Quarter-on-quarter growth over the last two quarters averaged 0.7 per cent, which is equivalent to 2.7 per cent on an annualised basis. This aligns with the WTO’s most recent forecast from April 2024, which predicted a 2.6 per cent increase in world merchandise trade for the year,” the global trade body had said in its latest report.
