India’s pace of growth looks set to be kept afloat by robust ocean exports despite an overall decline amidst international trade slowdown, according to data from the DHL Global Trade Barometer released by DHL, the world’s leading logistics company.
The DHL Global Trade Barometer, an early indicator of global trade developments calculated using artificial intelligence and big data analytics, revealed that India’s trade growth outlook will be driven primarily by healthy ocean exports of temperature or climate controlled goods, chemicals and products, consumer fashion goods and basic raw materials. In spite of this, September’s ocean trade index fell nine points to 50 with air trade registering a three-point climb to an index value of 48. India’s overall trade outlook index value of 49 will place the country in negative territory for the first time in six years, said a release.
Forecast for India consistent with stagnating world trade outlook
The Barometer’s results also suggest that world trade remains at a crossroads and will further lose momentum over the next two months, albeit at a slower pace compared to the previous quarter. The current decline is triggered solely by a drop in air trade, with global ocean trade outlook remaining stable. All seven nations surveyed reveal indexes below 50 points except for Japan and the UK, where the Barometer forecasts a positive growth momentum for the two economies at 53 points each. In the Global Trade Barometer methodology, an index value above 50 indicates positive growth, while values below 50 indicate contraction.
“Worldwide, trade conflicts continue to smoulder and geopolitical tensions are causing uncertainty. Against this backdrop, global trade continues to develop surprisingly well. Although the DHL Global Trade Barometer has further decreased—with an index value of 47 points—world trade is still closer to staying at its high level,” Tim Scharwath, CEO of DHL Global Forwarding, Freight, said. “This strengthens our conviction that globalisation will go on and that logistics will remain its key enabler in the future.”
Impact of US-Chinese tensions
The trade conflict between China and the US continues to simmer, resulting in an overall subdued trade mood, with US and China accounting for the most negative trade outlooks in September. It is expected that US trade will shrink further, remaining in negative territory with 45 points, despite having climbed one point since June. Both air and ocean trade prospects for US remain almost unchanged compared to the previous update. The DHL Global Trade Barometer forecasts a moderate decline for Chinese trade by four points to 45. The main driver of this development is the weak performance of Chinese air trade, which has dropped significantly by eight points to 43 over the past three months, the release said.
Launched in January 2018, the DHL Global Trade Barometer is an innovative and unique early indicator for the current state and future development of global trade. It is based on large amounts of logistics data that are evaluated with the help of artificial intelligence. The indicator is published four times a year, the release added.
“The decline in India’s trade outlook from previous quarters suggests it is certainly not immune to current global economic headwinds. However, with ocean exports remaining robust for sectors like consumer fashion goods and basic raw materials, it’s a positive sign that export of manufacturing goods such as textiles, fabrics and the like remain stalwart sectors that continue to uphold the country’s economy,” said Niki Frank, CEO, Global Forwarding India. “Equally, local and foreign investors have cause for optimism with the government unveiling a $20 billion package to slash corporate taxes from 35 per cent down to 25 per cent, including a proposed competitive 15 per cent rate for new manufacturing units in its efforts to reverse slowing growth and attract larger investors from abroad.”