Indian exports more resilient than that of most Asian economies

Exports from India are expected to contract by a bleak 22% in January 2009. But compared with the performance of the Asian export powerhouses, the Indian numbers have held up much better. Only two major economies have released their January export numbers and both are worse off than India. Vietnam has a negative growth rate of 24.2 %, while South Korea is far worse off at -32%. In absolute numbers, Indian exports in January contracted to $11.5 billion from $14.7 billion a year earlier, said commerce secretary GK Pillai on Tuesday. For 2009-10, total exports are expected to shrink by 5.88% to $160 billion, from the $170 billion likely to be achieved in 2008-09, due to the demand slowdown and recession in its major markets in the west. This would translate into a 7% rate of growth for 2008-09, said commerce & industry minister Kamal Nath. Since the ratio of exports of goods and services to GDP was only 23% for India, while it is as high as 45% for China—which means India depends less on its trade to grow-the impact of an export slowdown on India’s domestic production will be comparatively more benign. “Amid the gloomy global picture (at Davos) there was almost a consensus view that the emerging economies, including India, which is showing its resilience and promises to grow in excess of 7%, will continue to be a preferred investment destination,” Nath said. This optimism is also buoyed by the export figures.
For instance, India’s -1.1% export growth in December 2008 is depressing compared with the 16% growth rate of December 2007, but this too is better than that of China, the global export powerhouse. Chinese exports shrunk by 2.8% for the second consecutive month. The Hong Kong region of China was even worse affected with the export decline deepening from 7.9% in November to 16.2% in December. The Indian story is, therefore, progressing on a different pattern from that of the rest of Asia. The economy took the first hit when merchandise exports declined by a sharp 12.1% in October 2008, but has thereafter managed to roll back some of the losses. The contraction improved to 9.9% in November and dropped by just 1.1% in December.
While minister Kamal Nath was optimistic that exports in future would be better than the trend shown from October to January—”I don’t think we should look at provisional figures,” he said—his officials were somewhat more circumspect. Pillai said export growth would “not be even 5% this fiscal”. This means the new realistic target would be $170 billion for 2008-09. This is a growth of a mere 4.93% over 2007-08.
After registering a robust average growth of 35% from April-August 2008, exports grew by only 10% in September 2008. Since October total exports have been shrinking when compared to the same month in the previous year. Exports in October had contracted by (-)12.1%, (-)9.9% in November and (-)1.1% in December.