Global meltdown sparks fears of slide in exports

NEW DELHI: Depreciating rupee notwithstanding, global economic turmoil has started taking a toll on the country's robust export growth story. Low demand from the US and the EU - the two economies hit hard by the global crisis - has decelerated the country's export growth sharply in September 2008.

Against the average 35% growth in exports over the first five months of the fiscal, growth in September could dip to a low of 10% in dollar terms, according to early estimates by the commerce department. Sources predict the export growth may actually dip to a negative in a couple of months as global meltdown intensifies.

Amongst sectors worst hit by the economic crisis are the ones that export mainly to the US, EU and Japan. These include textiles and garments, handicraft and handloom, gems and jewellery, leather and carpets. In the case of gems and jewellery, it's a double whammy as the sector is import-driven and the rising dollar is inflating the import bills.

During April-August 2008, exports stood at $81.22 billion against $60.1 billion in the first five months of 2007, registering a growth of 35.1%. In August 2008 alone, exports grew 29.6% to $16 billion. Since the country's exports in September 2007 were $12.8 billion, an approximate 10% increase would translate into exports of $14 billion in September 2008.



"This is a matter of concern as exports usually pick up in September due to Christmas orders," a source said.

Commerce department officials predict the situation could worsen in the months to come. The exports in September were booked six months ago when recession had not set in so firmly in the Western markets. With each passing month, the situation in the global market is deteriorating. This will result in export growth falling further or running into negative territory, officials feel.