With the threat of recession looming over the US economy, Zerodha co-founder Nikhil Kamath on Monday shared his views on the dip in India’s export numbers. India’s merchandise exports fell around 12% to $34.48 billion (YoY) in December 2022 from $39.27 billion recorded in the same month of 2021.
This development poses a contrast to the reports quoting government officials suggesting a stronger acceleration in India’s GDP growth at around 11% in the Union Budget next week amid the prospect of weak exports.
Kamath took to Twitter to share comparative data about India’s trade deficit from FY17 to FY23 (up to December last year), saying that this could be an indication that the global economy is “slowing drastically”.
“Takeaways, export nos dropping in the last couple of months could indicate the global economy is slowing drastically; 2023 might see lower imports and exports for India,” he said.
According to government data released a few days back, exports dropped by 12.2% in December when compared to the previous year, reaching $34.5 billion.
Now that inflation is at 40-year highs, traders worry that the Federal Reserve and other central banks are actively raising interest rates to control it which might tip Western economies into a recession.
Since the US is one of the great superpowers if it experiences a mild or deeper recession it will eventually lead to worldwide repercussions.
“The biggest risk to these estimates is the interest rate hikes by the US Federal Reserve, which is expected to tip their economy into recession, hurting India’s exports,” a government official recently told news agency Reuters.
The official noted further that a dip in exports and a continued rise in imports to support domestic consumption would lead to a widening current account deficit (CAD). India’s CAD was 4.4% of GDP in the July-September quarter.
