India's Digital Services Exports To Gain As WTO Sees Year Of Asia-Led Rebound
India, according to the trade body was ranked 4th in the sector trailing behind the United States, United Kingdom and Ireland in 2023.
India's strengths in digitally delivered services, one of the country's major exports is expected to gain ground as the World Trade Organisation predicts a year of Asia-led growth in world trade.
Speaking to NDTV Profit exclusively, WTO chief economist Ralph Ossa noted that digitally delivered services are a fast growing component of international trade.
India, according to the trade body was ranked 4th in the sector trailing behind the United States, United Kingdom and Ireland in 2023. India's exports of digitally delivered services stood at $257 billion in 2023 up 17% from 2022
WTO has predicted that the volume of global merchandise trade will grow to 2.6% in 2024 and 3.3% in 2025, from 1.2% in 2023.
The relative strength of trade in 2024 and 2025 comes from understanding that the weakness in 2023 was Europe due to inflation, Ossa told NDTV Profit. "...we're just expecting things to normalize and for the volume of world merchandise trade to grow again, more or less (in the ratio of) one for one of GDP," he added.
The trade body expects that world real GDP growth at market exchange rate will remain mostly stable over the next two years at 2.6% in 2024 and 2.7% in 2025. This is from 3.1% in 2022 to 2.7% in 2023.
Ossa noted that Europe will neither be a pull factor nor a drag factor in 2024 as most of the growth is said to come from Asia.
Western markets, particularly United States and Europe are yet to fully shrug off the effects of inflation as they continue battling higher costs. The US consumer price inflation grew to 3.5% in March as of data released on Wednesday evening. "..I think we have to wait until next year (2025) before it really becomes an engine of growth and international trade," Ossa said.
US Importing Fewer Services From India
As countries seek closer and bring about trade fragmentation, the WTO in its latest report flagged a newer trend of services fragmentation, although still in its early days.
Data from the United States appear to show evidence of recent “friendshoring” in information and communication technology (ICT) services, the trade body said in its report.
US imports from North American trading partners like Canada increased from 15.7% of total ICT imports to 23.0%. At the same time, US imports from Asian trading partners, mostly India fell from 45.1% to 32.6% between 2018-2023.
Ossa noted that countries are looking at globalisation differently from what used to be economic interdependence to economic independance or economic dependance on political allies. This, is starting to affect trade policy and trade patterns, he said.
Whether this would necessitate India finding newer markets for is ICT services exports becomes the next pertinant question.
