Global trade: brighter prospects ahead

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Bikky Khosla | 22 Apr, 2014
Global trade is expected to increase 4.7 percent this year against a 2.1 percent growth in 2013 and an average 2.2 percent in the past two years, according to an estimate released by the World Trade Organization last week. This data is encouraging -- though the projected growth is still below the 20-year average growth rate of 5.3 percent, it certainly holds rich clues for near term development in global demand, which is crucial to our exports.

The forecast is based on a broad-based but modest upturn in world economy 2014. Last year, trade across the world was affected by several negative factors, including the lingering impact of the EU recession, high unemployment in euro area economies and uncertainty surrounding the timing of US Federal Reserve's monetary stimulus withdrawal that led to financial volatility in some developing economies. Compared to this, the current situation is much better, with recovery firming up in the US, outlook for the EU improving, and some developing economies including China gearing up for higher GDP growth.

The WTO data shows that exports from the developing countries grew faster than average at 3.3 percent in 2013, with Asia's exports growing faster than any other region at 4.6 percent. Exports from China and India increased by 7.7 percent and 6.7 percent, respectively. In addition, it is also interesting to note that some of our major export markets, including the US, the EU, Japan, China and the UK remained major merchandize importers in 2013. I hope that Indian exporters will be able to secure further opportunities with the increasing demand in these markets.

Exporters' body FIEO has made a rough estimate that our exports should increase by at least 10 percent in 2014, based on the assumption that India's exports growth has usually remained more than double the global trade growth in the past. In addition, it adds, if the modest growth of 4 percent registered in 2013-14 is taken into consideration, export growth for this fiscal year should be 15 percent to $360 billion. I think this target is easily achievable. In fact, we will be able to reach a higher target if the next government and the forthcoming foreign trade policy address some of the major challenges faced by the sector.

According to WTO Director General Roberto Azevedo, the Bali package endorsed in December last year would provide a strong foundation for global trade in the future. After the landmark achievement, there has been little movement since then, but I believe that work on the Doha Development Agenda is certainly ongoing, and an agreement is not far off. If all that was agreed upon can be brought into force, this will give a unique dimension to international trade.

I invite your feedback.