In a welcome development towards the end of a challenging trading year, India’s goods exports witnessed a notable 11.9% jump in February, marking the strongest uptick in 20 months. This surge, totaling $41.4 billion, represents the highest export tally in 11 months and signals resilience amidst ongoing global disruptions.
Despite concerns over logistical challenges in vital trading routes like the Red Sea and the drought-affected Panama Canal, India’s export performance has defied expectations. While it’s tempting to attribute this boost solely to backlogged orders and improving demand, economists suggest a more nuanced analysis is warranted.
The World Trade Organization (WTO) anticipates a modest 3.3% rise in global trade this year, following a sluggish 0.8% growth in 2023. However, the Goods Trade Barometer, a key metric tracking trade volumes, remains tepid with a reading of just 100.6 as of March 8, indicating subdued trade activity.
Despite some positive signals, such as the marginal increase in export orders, challenges persist, including regional conflicts and geopolitical tensions, which threaten to derail any potential gains. Policymakers must remain vigilant, particularly considering the impact of freight hikes on exporters’ margins.
While certain sectors like electronics goods exports have shown resilience, reflected in February’s numbers, others face challenges. For instance, the WTO’s barometer reading for electronic components trade has declined, signaling potential headwinds ahead.
Although imports surged to a 17-month high pace, driven by increased gold inflows, the trade deficit remains manageable for now. However, there’s a pressing need to support exporters, especially in labor-intensive sectors like textiles and gems and jewellery, to ensure sustained growth amidst uncertain global conditions.
