Economic recession in Germany could impact certain export sectors from India: CII EXIM

The economic recession in Germany is likely to affect India’s exports to the European country from various sectors such as chemicals, machinery, clothing and electronics, said Sanjay Budhia, chairman of the CII Committee on EXIM.

However, he said it was too early to see the impact of Germany’s economic recession on India’s exports.

Germany, the world’s fourth-biggest economy, is facing a recession as its GDP contracted 0.3 percent in the first quarter of 2023, after contracting 0.5 percent in the fourth quarter of last year.

“In 2022, 4.4 percent of India’s total exports went to Germany and were mainly concentrated in sectors such as organic chemicals, machinery, electronics, clothing, footwear, iron and steel items and leather goods.

“Although it is too early to see the impact of the German recession on India’s exports, the above sectors are likely to be hit the hardest,” he told PTI.

He said the entire European Union was struggling as soaring energy prices pushed Germany into a recession for the second quarter in a row.

“As its largest economy slides into recession, the EU as a whole will inevitably face contractionary pressures as well. Around 14 percent of India’s total exports go to the EU, with Germany being the main destination of Indian exports, followed by the Netherlands, Belgium, Italy and France,” he added.

Citing a report, he said think tank Global Trade Research Initiative (GTRI) has estimated the recession will impact India’s $2 billion worth of exports, including products such as smartphones, clothing, shoes and leather goods.

Speaking of investments from Germany, he said a recession in the European country could impact his investments in India. However, it is likely that German companies will look for cheaper alternatives in times of recession.

“This may result in minimal impact on German investments in India,” Budhia added.

Looking at India’s foreign direct investment from 2000 to 2022, Germany ranks ninth in total FDI inflow and has a total of over US$13.6 billion in sectors such as transportation, electrical equipment, metallurgical industry, service sector (especially insurance), chemicals, construction activity etc. invested. trade and automobiles.

Related Articles

Back to top button