Global Trade and Economic Turmoil in 2025-26
The year 2025-26 was marked by significant disruptions in global trade, starting with reciprocal tariffs imposed by US President Donald Trump and ending with a conflict in West Asia.
China's Trade Surplus
- Trade Surplus: China recorded a trade surplus of $1.2 trillion in 2025, continuing its export momentum despite global trade tensions.
India's Trade Dynamics
- Trade Agreements: India finalized trade agreements with the UK, EU, and the US amidst uncertainty.
- Merchandise Exports: Totaled $441.78 billion, a marginal increase from the previous year.
- Sector Performance: Labor-intensive sectors like gems, jewellery, textiles, and leather performed poorly, while electronic goods, particularly smartphones, showed strong export numbers, nearing $48 billion.
Impact of Global Events
- US Trade Relations: Exports to the US saw minimal growth, influenced by tariffs.
- West Asia Conflict:
- Exports to West Asia, a significant trade region, collapsed, particularly in March.
- 24 out of 30 export categories contracted, with exports to the region falling by 57.95% in the month.
- Exports to the UAE decreased by 61.93%, and to Saudi Arabia by 45.67%.
Oil Prices and Economic Implications
- Oil Prices: Brent crude traded around $95.8 per barrel, with India's crude basket at $110 per barrel as of April 15.
- Current Account Deficit: A $10 per barrel increase in oil prices could raise the deficit-to-GDP ratio by 30-40 basis points. Financing this increase may pose challenges.
