WTO unsure, but exporters confident of Q1 trade growth
CHENNAI, FEB. 21
Though global merchandise trade has bounced back in the December quarter, the World Trade Organization is uncertain about rapid growth in March quarter due to the emergence of new Covid strains. However, Indian exporters have not started seeing any weakness in demand yet.
WTO's recently released Goods Trade Barometer reading of 103.9—above the baseline of 100—indicates a marked improvement in trade in the fourth quarter of 2020 after steep declines earlier in the year. However, some of the barometer's component indices, including export orders and automotive products, have turned downwards, suggesting that the upward momentum may have peaked and that rapid growth is unlikely to be sustained through the first quarter of 2021.
"The outlook for the first quarter of 2021 is highly uncertain due to a rising number of Covid-19 cases, including new variants. The outlook for merchandise trade will depend to a large extent on the evolution of the virus and the dissemination of effective vaccines...Overall, this suggests that trade's upward momentum may have peaked," the WTO said.
But the Indian exporters are optimistic about the current quarter demand. "Our booking positions are encouraging. There is no let up in demand so far. The restrictions in Europe and the UK may pose some challenges for the export sector, especially for lifestyle goods like apparels and leather. However, till now we have not felt any weakness in demand. We believe that we are off the worst phase and the exports will continue to grow in March quarter as well,' said Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations.
However, exporters are still facing the issues related to the availability of containers and hike in freight charges. "China has fully recovered and is quite active in trade. The country is paying a premium on the empty containers and is thus attracting containers from everywhere. This has led to a shortage of containers, "he added.