India Key Driver Of LMIC Export Recovery But Uncertainties Threaten Growth: UN
Low- and middle- income countries (LMICs) have rebounded strongly since the COVID-19 pandemic. Gross national income (GNI) among these countries was resilient in 2023, at $36 trillion
Chennai: India has been one of the key drivers of the export recovery among low- and middle-income countries since the pandemic. However, growing trade protectionism and global trade policy uncertainty is anticipated to weigh materially on demand for exports from developing economies, finds the UN's trade and development body.
Low- and middle- income countries (LMICs) have rebounded strongly since the COVID-19 pandemic. Gross national income (GNI) among these countries was resilient in 2023, at $36 trillion.
For larger LMIC economies, export earnings have mostly recovered from the pandemic slump and now exceed pre-pandemic levels. Export earnings among the top nine LMIC exporters excluding China, -- India, Mexico, Brazil, Vietnam, Türkiye, Thailand, Indonesia, South Africa, and the Philippines — climbed 33 per cent from 2019 to 2023.
India and Vietnam are two of the biggest drivers of the LMIC export recovery, finds UNCTAD. India’s exports – merchandise and services together - grew 57 per cent from 2020 to 2023, from $507 billion to $811 billion, and that growth kept its 2023 debt-to-export ratio at 80 per cent despite soaring external debt. Vietnam’s debt-to-export ratio dropped 9 percentage points, to 37 percent, in 2023, even though the country added significant new debt, most of it through private borrowing.
However, growing trade frictions pose an additional challenge. LMICs accumulated a considerable amount of debt during the pandemic — their overall debt level rose from 26 percent of GNI before the pandemic in 2019 to 28 per cent in 2020. And revenue from exports is critical to servicing these larger debt burdens. The debt-to-export ratio, which compares total debt stock to export income, also has increased for all LMICs.
Growing trade protectionism is increasing global trade policy uncertainty and is anticipated to weigh materially on demand for exports from developing economies. The IMF projects that increased trade protections could reduce global economic output by as much as 7 per cent in the long term.
