January 12, 2009

Export Vulnerable To?

Business Standard published a small business news about global business exporting vulnerabilities.

Exporters are amongst the worst hit Indian businesspersons in the current global scenario. Their problems go back to 2007, when in the midst of a booming global economy, large capital inflows into India contributed to a sharp appreciation of the rupee, which eroded their profitability and even competitiveness. Just as they were coming to terms with this unexpected development, the situation changed dramatically.

As the world’s major markets slipped into recession, export volumes began to decelerate, with absolute year-on-year declines becoming visible in October. The subsequent sharp depreciation of the rupee helped shore up margins, but could not obviously offset the continuing drop in volumes. The early numbers for December provided some relief, with the year-on-year decline showing up as a mild 1.2 per cent, compared with declines of 12.4 per cent and 9.8 per cent in October and November, respectively.

However, the outlook for both the US and European economies points to GDP declines during 2009; so exporters should not expect any turnaround in their fortunes for several months. To the extent that a recovery is expected in the Indian economy in 2009, it will be driven by domestic demand in response to falling interest rates and fiscal stimuli. And so, for the first time in a decade, exports may have a zero- or low-growth year.

The above were just a fraction of the news and while reading through the whole article I was a bit confused. Could you please check it out and point to me the vulnerabilities that Business Standard write up intended to tell their readers? Check the post here -> Export vulnerabilities!

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