Global trade turns around
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India’s merchandise exports rose by 17.5% in February from a year earlier. But India is not alone. As the chart shows, other countries too have seen a remarkable improvement in export growth. Take for instance, Australia. The country’s exports increased 38% in January, a dramatic improvement from a 24% decline in January 2016. Brazil too has done very well. Apart from the countries shown in the chart, several others such as South Korea, Russia, South Africa and Turkey have also seen an improvement in exports in recent months.
What are the reasons? A low base is one, another is higher commodity and oil prices. But recent data also shows higher growth in the US and the eurozone, while China’s recent stimulus has also helped.
It goes without saying that sustained improvement in the global economy is essential for the uptrend in exports to sustain. Also, as highlighted in this column earlier, the risk of rising protectionism is now much higher with Donald Trump as president of the US. If those fears come true, then growth in global trade is likely to be temporary.