The liberal use of threats of tariffs by US President elect Donald Trump before his inauguration in January puts all forecasts of how world trade would shape up in the coming year difficult but Indian exporters are mostly positive about the prospects and their biggest worry stems from demand slowdown in bigger markets.
The World Trade Organisation (WTO) has forecast world merchandise trade to grow at 3% in 2025 after an expansion this year. Indian exports have been growing at the world average. In the January-November period the merchandise exports have been $ 400 billion, up 2% as compared to the same period of last year.
The Federation of Indian Export Organisations (FIEO) expects a slow start to 2025 and improvement in trade in the second half as the incoming Trump administration is expected to make efforts to end wars in Gaza and Russia-Ukraine. Trump’s tariff challenge will remain and will have to be navigated deftly.
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The drop in freight rates in recent weeks suggests that either the demand has slackened or enough inventory has been piled up so fresh buying will be slow to come on stream, Chief Executive Officer and Director General of FIEO Ajay Sahai said.
Trump has said on many occasions that war in the Middle East needed to end sooner than later. On December 22 Trump announced that Russian President Vladimir Putin has expressed his interest in meeting him regarding the war with Ukraine.
“The end of conflicts in the Middle East will improve the situation in the Red Sea region making navigation through the Suez Canal possible once again,” he said. The container ships have been completely avoiding Red Sea routes since early 2014 and taking longer routes through Cape of Good Hope. The longer routes have led to longer travel times and higher freight rates. The resolution of the Russia-Ukraine conflict could lead to increased demand from Europe.
The biggest sector of exports,
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