WTOʼs Latest Trade Forecast: What It Means for Indian Businesses

The World Trade Organization (WTO) has revised its global trade forecast, presenting a mixed outlook for 2024 and 2025. This revision has significant implications for Indian businesses, particularly Micro, Small, and Medium Enterprises (MSMEs) and exporters. Hereʼs an analysis of the forecast and an action plan for Indian businesses:

WTOʼs Revised Forecast

1. 2024 – Slower Growth: The WTO has revised its forecast for 2024, predicting a slower growth rate of 2.7% (previously reported as 0.8% in a hypothetical scenario, but the actual revision is to 2.7% from 2.6%) due to higher costs and weak demand. However, the hypothetical scenario mentioned in the query seems to be incorrect based on available data.

2. 2025 – Rebound Expected: For 2025, the WTO forecasts a rebound with a 3.0% growth rate (previously 3.3%), indicating a potential increase in demand and trade volumes.

Sectors to Watch

• Pharmaceuticals: Indiaʼs pharmaceutical sector is expected to remain strong, driven by its reputation for producing affordable generic drugs.

• IT Services: The IT sector will continue to thrive due to increasing demand for digital services globally.

• Agricultural Exports: Agri-exports are likely to stay robust, benefiting from Indiaʼs agricultural production capabilities and global demand for food security.

Action Plan for Indian MSMEs & Exporters

• Diversify Markets: Explore emerging markets in the Middle East, Africa, and ASEAN to offset risks associated with Western economies. These regions offer opportunities for growth due to their expanding consumer bases and infrastructure development.

• Leverage Trade Agreements: Utilize Free Trade Agreements (FTAs) like the India-UAE and India-Australia agreements to benefit from lower tariffs and better market access. These agreements can enhance competitiveness and facilitate smoother trade.

• Strengthen Digital Trade: Invest in e-commerce platforms and digital payment systems to reach global customers more efficiently. Digital trade can help navigate logistical challenges and expand market reach.

Strategies for Success

• Market Research: Conduct thorough market research to identify trends and consumer preferences in target markets.

• Product Diversification: Diversify product offerings to cater to changing global demand patterns and capitalize on emerging opportunities.

• Government Support: Leverage government initiatives and schemes designed to support MSMEs in exporting, such as export incentives and trade facilitation programs.

In Summary

While the WTOʼs revised forecast presents challenges for 2024, Indian businesses can prepare for a rebound in 2025 by diversifying their markets, leveraging trade agreements, and strengthening digital trade capabilities. By adopting these strategies, Indian MSMEs and exporters can navigate global trade uncertainties effectively and capitalize on emerging opportunities.

Sources:

1. https://www.balticexchange.com/en/news-and-events/news/baltic-magazine/2024/WTO-raises-2024-trade-forecast-but-risks-remain.html

2. https://www.trade.gov.tr/news/world-trade-organization-wto-global-trade-outlook-and-statistics-report

3. https://www.wto.org/english/res_e/booksp_e/stat_10oct24_e.pdf

4. https://www.mygstrefund.com/indian-msmes-global-2025-strategy-schemes

5. https://protium.co.in/indias-msmes-poised-to-drive-45-of-exports-in-fy-2025/

6. https://www.weforum.org/stories/2024/03/india-small-businesses-tradetech-access-global-markets/

7. https://igpp.in/wp-content/uploads/2023/06/The-Impact-of-Cross-Border-Digital-Transmissions-on-the-MSME-Sector-in-India-and-the-Benefits-of-the-WTO-E-Commerce-Moratorium-.pdf

8. https://www.pwc.in/assets/pdfs/viksit-v1.pdf