New Delhi: A new study from the World Bank has found that the trade-to-GDP ratio, or ‘trade openness’ ration, has fallen to levels last seen during the 2008 financial crisis. This has been seen as a result of the COVID-19 pandemic, the Russia-Ukraine war and trade tensions between the US and China, Livemint reported.
The paper by Sebastian Franco-Bedoya said the trade-to-GDP ratio had risen to 61% in 2008, before crashing to 52% in 2009 in the aftermath of the global financial crisis. “The trade-to-GDP ratio recovered in 2011 to 60%, but since trended back to 52%. The dynamics after 2008 seem to suggest that globalization stagnated or declined,” Franco-Bedoya states.
This does not have to mean that there are new barriers to trade. “A low ratio does not necessarily imply that high trade barriers exist but maybe due to factors like the size of an economy, geographic remoteness from trading partners, and the economy’s structure,” the paper said.
According to Livemint, India’s exports too are expected to remain under stress due falling demand in Western countries. “India’s exports fell 12.7% from $39.7 billion a year earlier to $34.66 billion in April, government data published on Monday showed,” the newspaper report stated.
Franco-Bedoya’s paper mentions India as the driver of globalisation in the South Asia region. “After underperforming the world economy and having serious difficulties, India made rapid progress (starting around 1990) in integrating into the global economy and recovered the lost ground to a large extent,” the report states.
