There is no doubt that the world economic outlook has turned unfavourable. According to a recent report by the International Monetary Fund, the world GDP growth estimates have been cut to 3.7 per cent for 2008 and 2.2 per cent for 2009, which is significantly lower as compared to 5 per cent achieved in 2007.
Likewise, export volume (goods and services) forecast for the developing and the emerging economies has been cut to 5.6 per cent for 2008 against the 9.5 per cent achieved in 2007. Even for 2009, the numbers are not impressive at 5.3 per cent.
To a large extent, the slowdown will be consequent to the sharp deceleration in imports by advanced economies such as the US, Europe and Japan among others.
The picture for India, although not as gloomy as in the case of advanced economies, is nowhere exciting. The global slowdown is likely to impact Indian companies, which export or have their business units in international markets.
To give some numbers, almost 13 per cent of the total Indian exports go to the United States, followed by countries like United Arab Emirates, China, Singapore, the United Kingdom and Hong Kong.
However, as shown in Slowing down, none of these economies are in good shape, and are expected to see a sharp slowdown in economic growth with some likely to shrink next year.
Meanwhile, Indian exports which grew at about 30.8 per cent during April-September 2008, are already showing signs of a slowdown; the growth rate was down to 10.4 per cent in September 2008. Read on. . .
Text: Jitendra Kumar Gupta, with inputs from Ram Prasad Sahu, Dhiren Shah and Sarath Chelluri.
Image: Dark clouds hover over the Indian economy. | Photograph: Manan Vatsyayana/AFP/Getty Images
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