Global trade growth is likely to further diminish in the ongoing quarter, shows the latest data from the World Trade Organization (WTO). This might mean a hit for Indian export growth, which had started to look up in October, following a contraction in September.
The index for WTO’s latest World Trade Outlook Indicator (WTOI) for October-December, issued on Monday, stood at 98.6, the lowest since October 2016. All component indices are down. It was 100.3 for July-September; the baseline is 100 and indicates growth in line with medium-term trends. A reading higher than 100 suggests above-trend growth; below 100 indicates the reverse.
After falling 2.1 per cent in September, year-on-year, India's export rose 17.9 per cent last month. A slowing in global trade could hit our export in November and December.
The continued moderation in the WTOI index was driven by steady decline in the export orders index, at 96.6. This remains below-trend and is approaching the weakest point, recorded in 2012 during the euro zone crisis. Indices for automobile production and sales (96.9), electronic components (93.9), and agricultural raw materials (97.2) have moved from on-trend to below-trend. International air freight (100) and container port throughput (101.2) have dipped but remain on-trend. The latest results are consistent with WTO's downgraded outlook for global trade, issued in September amid escalating trade tensions and tighter credit conditions in important markets.
The revised forecast anticipated slower trade expansion to 3.9 per cent in 2018 and further to 3.7 per cent in 2019, from 4.7 per cent in 2017.