Informist, Thursday, Apr 25, 2024

--Fin min releases monthly economic review for March

--Fin min: 2024 trade outlook positive, shipping disruption a concern
--Fin min:2024 trade outlook positive, geopolitical risks pose concern
--Fin min: Comfortable trade gap seen keeping rupee in comfort range
--Fin min: Robust foreign inflow seen keeping rupee in comfortable range
--Fin min: Geopolitical tension a concern, but risks have softened
--Fin min: India trade gap seen falling on deepening output-linked sops
--Fin min: India trade gap seen declining despite slowing global trade
--Fin min: See rebound in global econ growth, recession fading

NEW DELHI - While the overall outlook for growth in global trade in 2024 is positive, there is some risk emanating from the ongoing geopolitical tension and shipping line disruption, the finance ministry said today in its monthly economic review for April. The ministry's comment comes amid the escalation in Israel-Iran conflict earlier this week and attacks by Iran-backed Houthi rebels in the busy Red Sea trade route.

"Going forward, the (trade) outlook for 2024 looks positive, but geopolitical issues and shipping disruptions increase uncertainties," the ministry said. Tensions in West Asia flared up after Iran launched 300 drones and missiles targeting military sites in Israel over the weekend.

Additionally, since November, the trade route through the Red Sea is seeing disturbance with Houthi rebels targeting container ships passing through the Red Sea, a route that accounts for 30% of global container traffic, in a show of support to the militant Palestinian group Hamas. This development has forced shipping vessels to take a longer route around Africa, which is driving up freight costs.

"Geopolitical tensions remain a concern, but notwithstanding recent developments, risk perceptions have softened, offering a potential upside for growth," the ministry said, adding that it expects trade to grow faster this year due to rebound in global economic growth and the fading away of recession.

India's merchandise exports contracted in 2023-24 (Apr-Mar), the first time since the pandemic year of 2020-21, due to a slowdown in global economic growth. The country's exports declined 3.1% to $437.06 bln. The imports also, after growing in double digits for two consecutive years, fell 5.4% to $677.24 bln. India's trade deficit was $240.17 in 2023-24, lower than the previous year's $264.90 bln.

In its report, the finance ministry said it expects trade deficit to decline further in the future, thanks to deepening of the production-linked incentive schemes that aim to boost manufacturing in India.

"Going forward, robust foreign inflows and comfortable trade deficits are expected to keep the rupee within a comfortable range," the finance ministry said. There is anticipation of strong foreign inflows this year on inclusion of some Indian gilts in global bond indices. Index provider JP Morgan will include Indian gilts on its Government Bond Index – Emerging Markets from Jun 28, while Bloomberg has proposed to add Indian bonds on its Emerging Markets Local Currency Index from September. End

US$1 = 83.36 rupees

Reported by Krity Ambey

Edited by Ranjana Chauhan

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