Extrapolative Modeling of International Trade using ARIMA Model: A Performance Comparison between India and China during COVID-19

A reshaping of the global supply chain is on the cards with companies searching for alternative supply choices, with the current instability in China and with some countries planning to pull their businesses out of China. India has already earned the reputation of being a responsible and trustworthy nation with efficient and participatory governance in these times of crisis. In the light of this scenery, the current study contrasts the success of Indian and Chinese foreign trade with the rest of the world.The merchandise trade and commercial service exports and imports from both countries with the rest of the world were obtained from the official WTO website to compare the output (deviation of actual from projected during COVID-19) of Indian and Chinese foreign trade with the rest of the world. The present research employs models of ARIMA using a three-step model creation process (i.e. model recognition, model estimation and diagnostic check). For the identification of the appropriate model ADF, PP Test, KPSS test and Auto-correlation function and partial auto-correlation function were used, approximate models were developed based on the defined p, d, q order and finally the diagnostic Box- Ljung test was carried out. The results show that China has favorable merchandise trading conditions while India is in a stronger spot in the case of trade in services.