Signs of hope on the export front

Last Monday, the good news came that export in March at $32.55 billion was 11 per cent higher as compared to the $29.3 billion in March 2018. For 2018-19, the cumulative value was $331 billion, as against $303.5 billion during 2017-18, an encouraging growth of 9.1 per cent.

No doubt, these fell short of the commerce ministry’s FY18-19 target of $350 billion. And, meagre growth over the FY13-14 export of $313 billion – just about 1.15 per cent annual growth in the past five years. The share of merchandise export in Gross Domestic Product has also fallen from a high of around 16 per cent in 2013-14 to just about 11 per cent.

Even so, some positive aspects deserve notice. Export in March of non-petroleum and non-gem & jewellery items were $25.6 billion, as compared to $22.6 billion in March 2018, a 13.4 per cent growth. For the entire financial year, this segment totalled $243 billion, from $224.5 billion for the corresponding period in 2017-18, a rise of 8.2 per cent. Twenty of the 30 major product groups were in positive territory for March, most of these showing impressive growth. 

For the full year, the sectors showing healthy growth included petroleum (28 per cent), plastics (25.6 per cent), chemicals (22 per cent), pharmaceuticals (11 per cent) and engineering (6.4 per cent).  

The World Trade Organization (WTO) expects merchandise trade volume growth to fall to 2.6 per cent in 2019, down from 3 per cent in 2018. Global economic growth is now projected to diminish from 3.6 per cent in 2018 to 3.3 per cent in 2019, before returning to 3.6 per cent in 2020, says the International Monetary Fund. It is projected to soften from a downwardly revised 3 per cent in 2018 to 2.9 per cent in 2019, amid rising downside risk to the outlook, estimates the World Bank. The Organisation for Economic Co-operation and Development also cut its forecasts for the global economy in 2019 and 2020, following on from previous downgrades in November. It warned that trade disputes and uncertainty over Britain’s exit from the European Union would hit world trade.

However, sanguine voices are also there. Radhika Piplani of YES Bank notes that on a sequential basis, South Korea’s passenger vehicle export and Taiwan’s automobile export increased in March by 30.3 per cent and 37.9 per cent in unit terms, respectively. This suggests a likely recovery in shipment volume for some of the export-reliant economies. On an annualised basis, South Korea, China, Taiwan and Indonesia’s export saw significant recovery in March.

Also, the US manufacturing PMI (Purchasing Managers’ Index) increased to 55.3 in March, from 54.2 from February. 

The strength in the US labour market continues to hold strong, amid increasing tailwinds. This further smoothens some of the worries faced by Asia in general and India in particular.  So, the global export picture looks less grim than suggested by some of the early global trade indicators, says Piplani.

So, for the moment, we have something to cheer. Our export prospects, though, depend on many global and local factors. These include how the withdrawal of tariff concessions in the US under the Generalized System of Preferences and disputes at the WTO regarding our export subsidies play out.

E-mail: tncrajagopalan@gmail.com