India’s merchandise exports declined by 1 per cent to $38.01 billion in December, while imports increased by 4.9 per cent to $59.95 billion, resulting in a trade deficit of $21.94 billion, as per data from the commerce department released on Wednesday.
The World Trade Organisation (WTO) recently downgraded its forecast for global merchandise trade growth in 2025 to 3 per cent, down from its previous estimate of 3.3 per cent.
For 2024, however, the WTO slightly upgraded its merchandise trade growth projection to 2.7 per cent, up from the earlier estimate of 2.6 per cent.
The WTO noted that the risks to its forecast are predominantly on the downside, driven by regional conflicts, geopolitical tensions, and policy uncertainties.
In the event of an escalation in the conflict in West Asia, the impact would likely extend to other regions, potentially disrupting shipping and causing higher energy prices due to increased 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 United Nations Conference on Trade and Development (UNCTAD) highlighted in its Global Trade Update last month that shifts toward protectionist trade policies in the US, inward-looking industrial policies in various countries, the potential for renewed trade wars, and ongoing geopolitical tensions are likely to negatively impact global trade in 2025.
Despite this, moderating global inflation, stable economic growth projections, and improving business activity suggest positive momentum for global trade in early 2025. UNCTAD forecasts global trade to grow by 3.3 per cent, or $1 trillion, in 2024, with both goods and services contributing roughly $500 billion each.
In the first half of 2024, merchandise trade grew by 2.3 per cent year-on-year, marking a rebound after a 1.1 per cent decline in 2023, which was impacted by high inflation and rising interest rates.
