Can Covid-19 Turn The Tables In Favour Of India's Exports?

The fast spread of COVID-19 or new coronavirus has tremendously shocked the world economy due to its adverse effects on the demand and supply of goods and services.

- Vaibhavi Pingale

As per Morgan Stanley, a global rating agency global Gross Domestic Product (GDP) growth will decelerate by 2.3 percent over the previous year in the first half of 2020, but it would recover in the second half of the year. In the case of the Indian economy, most of the global and domestic rating agencies such as Moody, S&P, Crisil, and Fitch have reduced the forecasted GDP growth at around 5.2 percent or less for 2021.

There will be three segments of service sectors which will be majorly affecting the GDP due to its inoperability. Soumya Kanti Ghosh, Chief Economic Advisor, State Bank of India said, “On an aggregate basis, we estimate that the impact of a 5 percent inoperability shock could be 90 basis points on GDP from Trade, Hotel, Transport, Storage and Communication segments, that could spread over FY20 and FY21, with a larger impact in FY21”.

Out of the above-mentioned segments, international trade has been facing a lot of hurdles because of lockdowns or restrictions imposed by the countries on exports as well as imports. There is also fear of the coronavirus effect on outbound shipments.

Exports bucked the six-month declining spree by registering modest 2.91 percent growth in February 2020 at $27.65 billion. All the major foreign exchange earners such as petroleum products, engineering goods, and electronic items registered expansion in the month year-on-year. Consequently, the trade deficit fell to the lowest level of $9.85 billion in February 2020. Moreover, the contraction in exports and imports can be seen March onwards depending upon the spread of the virus.