Export outlook uncertain as Covid-19 cases in India rise again: Experts

Even as goods exports witnessed a sharp growth in March, experts cautioned the rise may not sustain as rising Covid-19 cases in India and abroad lead to uncertainty.

According to the preliminary data released by the government on Thursday, merchandise exports hit a record high of $34 billion, up 58 per cent year-on-year in March. On a sequential basis, the growth in merchandise exports was 21 per cent. The value of exports has now surpassed its previous high of $32.55 billion in March 2019 —almost a year before the outbreak of Covid-19.

The sharp jump in exports can be attributed to a low base as March 2020 saw the outbreak of Covid-19 and a subsequent nationwide lockdown. However, it also signals a recovery in demand.

“The strong growth in exports of engineering goods in March suggests a bright outlook for the sector but one needs to be cautious before arriving at any conclusion on the basis of a short-term surge,” said Engineering and Export Promotion Council of India (EEPC) India Chairman Mahesh Desai.

CARE Ratings’ chief economist Madan Sabnavis said while the data looks impressive, exports are generally higher during this time as companies try to meet their targets before the end of the financial year.

“Besides, we need to look at three successive months of growth to conclude if this trend is sustainable. A rise in the number of cases in European nations may have some impact on exports. However, exports to the US and African countries seem stable at the moment,” Sabnavis said.

According to the World Trade Organization’s (WTO’s) latest forecast, world merchandise trade volume is expected to increase by 8 per cent in 2021 after falling 5.3 per cent in 2020. It also expects trade growth to slow to 4 per cent next year, with the total volume of global trade remaining below the pre-pandemic trend.

“The relatively positive short-term outlook for global trade is marred by regional disparities, continued weakness in services trade, and lagging vaccination timetables, particularly in poor countries. Covid-19 continues to pose the greatest threat to the outlook for trade, as new waves of infection could easily undermine any hoped-for recovery,” WTO had said on Wednesday.

In India, Covid-19 cases have been rising rapidly over the last few weeks. The country reported over 81,000 fresh cases on Friday, with Maharashtra accounting for the majority of the cases. Some state governments such as Maharashtra, Madhya Pradesh have also announced localised lockdown to contain the spread of the virus. An SBI report released last month said the second wave could last up to 100 days starting February 15.

According to Ajai Sahai, director-general and CEO of Federation of Indian Export Organisations, rising cases are a cause for concern as it adds to the uncertainty and may impact exports. “We may not see a drop in manufacturing but it is definitely causing some concern. The crucial question is how long the (second) wave is going to last,” Sahai said.