According to exporters, India’s exports of commodities to the European Union country from industries like garments, footwear, and leather goods are anticipated to suffer as a result of Germany’s economy declining for two straight quarters.
Germany’s gross domestic product (GDP), according to data provided by the Federal Statistical Office on Thursday, shrank by 0.3% from January to March. This comes after the largest economy in Europe experienced a 0.5% decline in the fourth quarter of 2022.
Since other nations are already experiencing a recession, this would have an impact on both German and European exports from India, according to Sharad Kumar Saraf, a Mumbai-based exporter and the chairman of Technocraft Industries.
He claimed that in 2022–2023, India would export USD 10.2 billion to Germany. the leather, chemical, and light engineering industries would be the most affected, and it might decline as a result of Germany’s protracted recession.
Ajay Srivastava, co-founder of the economic research tank GTRI, stated that the recession will negatively affect India’s $2 billion in exports. This includes clothing, footwear, smartphones, and leather products. Daily usage products are the first to suffer during a recession.The soon-to-be-imposed carbon border tax by Germany will have an influence on exports of iron and steel products as well, he claimed.The recession in Germany would have an impact on order flows into India, according to Narendra Goenka, chairman of the Apparel Export Promotion Council (AEPC).
“Business will decline by at least 10%. The investment flow from Germany would undoubtedly be impacted by this slowdown, says Goenka. added.
Germany is the ninth-largest investor in India, according to Saraf, and investments from that country may not be impacted since German businesses would be seeking for less expensive alternatives during a recession.German purchasing would be impacted by the crisis, according to Yogesh Gupta, regional chairman of FIEO (Eastern Region), since that country is the key engine of growth for the EU.
However, it is still too early to remark on how the recession is affecting Indian exports, according to Gupta.
India exported goods worth USD 1.5 billion in machinery, USD 1.2 billion in electronics, including smartphones (USD 458 million), USD 990 million in apparel, USD 822 million in organic chemicals, USD 332 million in footwear, USD 305 million in leather goods, USD 474 million in articles of iron and steel, USD 990 million in apparel. auto components (USD 406 million).
Two consecutive quarters of contraction is a common definition of recession, though economists on the euro area business cycle dating committee use a broader set of data, including employment figures.
