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Why India's dipping export numbers are a sign of concern, explains Zerodha's Nikhil Kamath

Nikhil Kamath is the co-founder and CIO of True Beacon and ZerodhaPremium
Nikhil Kamath is the co-founder and CIO of True Beacon and Zerodha

Zerodha's Nikhil Kamath has flagged a dip in India's export numbers. Sharing comparative data from FY17 to FY23 (up to December last year), he said that this could be an indicator of the global economy ‘slowing drastically’.

Amid lingering concerns that the US economy is headed for recession, Zerodha's Nikhil Kamath has flagged a dip in India's export numbers. The development comes even as reports quoting government officials suggested that India is likely to peg its nominal GDP growth at around 11% in the annual budget next week amid the prospect of weak exports.

Sharing comparative data from FY17 to FY23 (up to December last year), Kamath said that this could be an indicator of the global economy ‘slowing drastically’.

“2023 might see lower imports and exports for India. Everyone has a different definition of a recession. Mine would be higher unemployment, no stock market gains, and down rounds in private equity and real estate. " he wrote sharing the data.

According to the infographics shared by him, exports dropped by 12.2% in December as compared to the previous year, reaching $34.5 billion.

Traders worry the Federal Reserve and other central banks might be willing to tip Western economies into a recession as they try to extinguish inflation that is at multi-decade highs.

"The biggest risk to these estimates is the interest rate hikes by the US Federal Reserve, which is expected to tip their economy into recession, hurting India's exports," a government official recently told news agency Reuters.

Nominal GDP growth — which includes inflation and is the benchmark used to estimate tax collections — can be affected by suppressed external demand next year due to a likely US recession. The government expects nominal growth of 15.4% for the current fiscal year that ends on March 31.

The official added that a fall in exports and a continued rise in imports to support domestic consumption would lead to a widening current account deficit (CAD). India's CAD was 4.4% of GDP in the July-September quarter, higher than 2.2% a quarter ago and 1.3% a year ago, as rising commodity prices and a weak rupee increased the trade gap.

(With inputs from agencies)

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