WTO report reveals why India is the bright spot in gloomy world economy

Ever wondered why India is often called as one of the bright spots in an otherwise gloomy global economy? The recently published "World Trade Statistical Review" of the World Trade Organisation (WTO) could provide some clue, as it shows that India's global trade engagement in 2015 was better than most of the other countries in almost every segment where it has a noticeable presence.

The Global Picture

The volume of world trade continued to grow slowly in 2015 recording a growth of 2.7 per cent, roughly in line with world GDP growth of 2.4 per cent. The dollar value of world commercial services exports fell 6 per cent in 2015 to $4,754 billion, although the decline was less severe than for merchandise, the WTO report says. It attributes the weakness of global trade in 2015 to a number of factors, including an economic slowdown in China, a severe recession in Brazil, falling prices of oil and other commodities, and exchange rate volatility.

Did India buck the trend?

Not really. India did suffer the pangs of global slowdown. India's exports have been on continuous decline for the 18 months until it showed a modest 1.27 per cent growth in June 2016. However, the slowdown was not as bad as most other countries, in most cases.

Here is how some key sectors, where India is amongst the top 10 countries in terms of global trade, performed in 2015.

Chemicals, Textiles & Services

The WTO report points out that the ranking of the major exporters of chemicals remained mostly unchanged in 2015, with only India improving its position, from tenth to ninth place, replacing China which went down to tenth.

In the case of textile exports, India maintained its third position, behind China and the European Union. In the more specific clothing exports, India showed a 2 per cent growth, to become the fourth leading country among the top 10.  

While most leading exporters of other commercial services recorded significant declines in 2015, India, Hong Kong and  China were the only economies with positive growth above 1 per cent, rising by 2 per cent in the case of India and Hong Kong and 6 per cent in China.

The report also points out that developing economies' participation in global commercial services trade continued to rise in 2015, reaching 32 per cent of global exports or $ 1,521 billion. And the increase was mainly due to Asian countries, which accounted for 22.4 per cent of world exports of services in 2015. China, India, the Republic of Korea, Hong Kong  and Thailand were among the main contributors.

Similarly, it is estimated that other business services comprised 20 per cent of developing economies' total services exports in 2015. This category includes research and development, professional and management consulting services, technical, trade-related and other business services. Asian nations continued to play the main role (22.9 per cent) here, with exports from India and China alone accounting for 10.2 per cent of world exports. The WTO report says that India's exports to foreign clients included a wide range of services, such as finance and accounting, auditing, book keeping and tax consulting services, customer services, medical transcriptions, and various types of engineering services (embedded solutions, product design, industrial automation and enterprise asset management).

The agricultural produce trade was an exception as India was down two places to ninth position. The report stated that all of the major exporters of agricultural products experienced a decline in exports in 2015, with India recording the most significant fall (-19 per cent) and China the smallest decline (-2 per cent).

The World Trade Statistical Review replaces "International Trade Statistics", the WTO's former annual statistical publication.