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Exports will bounce in 2010

(D. H. Pai Panandiker is President of RPG Foundation. The views expressed in this column are his own)

By D. H. Pai Panandiker

External trade has been the worst victim of world recession. Countries that depended more on trade were hit harder. The turn round in most countries therefore depends on how fast the world economy recovers.

World exports had increased in 2008 by a hefty 15 per cent to cross $15.7 trillion. In volume, however, exports were up a mere 2 per cent. The largest exporter was Germany closely followed by China.

They each had a share of about 9 per cent in world exports. India’s share was a mere 1.2 per cent. Even so, exports do matter to Indian industry because nearly 15 per cent of industrial production is exported. The fall in exports was the main reason why industry got a jolt in October.

The US which was the first to get into recession and would possibly be the last to get out of it, is the largest importer. In 2008 its total imports exceeded $2 trillion, more than 13.7 per cent of world imports.

When US imports declined many countries found their exports and consequently growth, shrink. US share in our exports in only 12 per cent and our exports to US declined a mere 1.5 per cent.

WTO has estimated that world exports will contract about 10 per cent this year. One reason is that the US may not recover before the end of the year though Germany, France and Japan have been able to cross into positive territory. Continued...

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