India's trade deficit narrowed to $20.78 billion in September, as the growth of merchandise imports slowed to 1.6 per cent, while merchandise exports saw a modest increase of 0.5 per cent. This shift comes in response to subdued global demand amid ongoing geopolitical challenges, according to data from the commerce department. In contrast, the trade deficit had widened to a 10-month high of $29.7 billion in August.


Exports reached $34.58 billion in September, while imports accounted for $55.36 billion for the month. Commerce Secretary Sunil Barthwal noted that merchandise exports performed strongly in the first half of FY24 despite various challenges.


Last week, the World Trade Organisation (WTO) downgraded its forecast for global merchandise trade growth in 2025 from an earlier estimate of 3.3 per cent to 3 per cent. For 2024, the WTO slightly upgraded its forecast for merchandise trade growth to 2.7 per cent, up from the previous estimate of 2.6 per cent.


However, the multilateral trade body warned that risks to the forecast remain on the downside, driven by regional conflicts, geopolitical tensions, and policy uncertainties. Should conflicts in West Asia escalate, the repercussions would likely ripple across other regions, mainly through additional disruptions to shipping and rising energy prices fueled by increased risk premiums.


“While the disruptive impact of the Red Sea crisis has been contained to date, other routes could be impacted in a wider conflict. There would also be a heightened risk of energy supply disruptions, given the region’s significant role in petroleum production. Higher energy prices would dampen economic growth in importing economies and weigh on trade indirectly,” the WTO said.


In the first half of 2024, trade experienced a year-on-year increase of 2.3 per cent, marking a rebound from a decline of 1.1 per cent in 2023, influenced by high inflation and rising interest rates.


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