Global Trade Disruptions in 2025-26

Summary of Key Points from Global Trade and Economic Context of 2025-26

Economic Context

• Global Trade Disruptions: Marked by the imposition of reciprocal tariffs by the US and a conflict in West Asia.
• China’s Trade Surplus: Notable trade surplus recorded at $1.2 trillion in 2025, despite US trade wars.
• India's Merchandise Exports: Reached $441.78 billion for the fiscal year, showing only marginal growth from the previous year.

Sectoral Performance

• Export Performance:

  • Labour-intensive sectors (gems & jewellery, textiles, leather) performed poorly.
  • The electronic goods sector stood out, with exports nearing $48 billion, driven primarily by smartphones.

• Trade with US and West Asia:

  • Exports to the US saw negligible increases.
  • Significant decline in exports to West Asia, particularly evident in March 2025, where exports dropped by 57.95% in the month, influencing overall goods exports which decreased by 7.4%.

• Regional Export Data:

  • UAE: Exports down by 61.93%.
  • Saudi Arabia: Exports down by 45.67%.

Import Dynamics

• Overall Imports: Decreased by 51.64% in the same period.

Oil Prices and Current Account Deficit

• Brent Crude Price: Trading at approximately $95.8 per barrel; India’s crude basket also elevated at around $110 per barrel as of April 15, 2026.
• Impact on Current Account Deficit: A sustained increase in oil prices could increase the deficit-to-GDP ratio by 30-40 basis points for every $10 per barrel rise, as projected by ICRA.

Conclusion

Emerging from the discussed events, India's trade dynamics appear significantly influenced by international relations, particularly with the US and West Asian countries, coupled with the ongoing volatility in oil prices impacting economic forecasts and the current account deficit. The performance of certain sectors and overall trade agreements remains pivotal in navigating future challenges.