India’s Exports May See Tepid Growth in 2023

India’s exports might expect slow growth this year since the country’s biggest export markets are anticipated to decrease substantially in 2023.

According to the India government’s monthly economic report, global trade growth slowed in 2022 and is forecast to continue to drop in 2023 due to a further decline in trade volume and value due to the slowdown of global production.

The report said that high-frequency evidence indicates that monetary tightening has already started to impair global demand.

According to the India government official, this may continue in 2023 because various organizations have predicted a slowdown in global growth.

The monthly economic report, issued on Thursday, warned that in addition to monetary tightening, uncertainties resulting from the pandemic’s persistence and the ongoing conflict in Europe might further impede global development.

While inflation risks look set to diminish in 2023/24, geopolitical tensions and consequent supply chain disruptions may not, it added.

The report said that despite the prospect of tepid export growth, the International Monetary Fund (IMF) and the World Bank project India to be the fastest-growing major economy in 2023.

The IMF projects India will grow at 6.1% in 2023, while the World Bank estimates the country’s growth for next year at 6.6%.

The report said that, if predictions are accurate, monsoon rains in India could be deficient, leading to lower agricultural output and higher prices.

The Reserve Bank of India is mandated to keep retail inflation within its tolerance band of 2%-6%. Data released last week showed India’s annual retail inflation in January rose above the central bank’s upper threshold for the first time in three months to 6.52% from 5.72% in December.