Millennium Post

Weak exports may shave 0.4 percentage point off growth rate

A slowdown in exports is likely to bring down India’s growth rate by 0.40 percentage point in 2015, a report by global brokerage firm HSBC has said. The outlook for exports in 2015 is not very encouraging as global growth remains lethargic and pace of removing domestic bottlenecks remains gradual, the report said. 

“The ‘true’ impact of weaker export growth means that GDP growth will likely be 40 bp (0.40 percentage point) lower in 2015, though this could reverse in 2016 if exports pick up,” HSBC India Chief Economist <g data-gr-id="29">Pranjul</g> Bhandari said in a research note on Tuesday. “2015 may not be a great year for Indian exporters. World growth continues to remain sluggish and domestic bottlenecks (stalled projects from last year) are still lingering. However, if we chip away at resolving domestic bottlenecks, this could change,” HSBC said.

Auctioning coal mines to the private sector to restart electricity projects, pressing ahead with necessary land acquisition for road building or easing bureaucratic hurdles in the attainment of licences will help Indian exporters gain competitiveness. “The ‘true’ impact of slowing exports growth in 2015 would be 40 bps shaved off from GDP growth. On the other hand, as exports recover in 2016, the ‘true’ impact of exports could add 70 bps to GDP growth,” Bhandari said.

According to HSBC, export growth will soften not only in value but also in volume terms through 2015. Meanwhile, the brokerage has revised higher its oil price assumption to $68 per barrel in end-2015 from $62 per barrel earlier.

Accordingly CAD is likely to widen marginally to 1.5 per cent of GDP in <g data-gr-id="25">financial year</g> 2015-16, HSBC said. As per the official data, India’s exports contracted by about 14 <g data-gr-id="27">per cent</g> in April to $22 billion due to a sharp dip in petroleum, gems and jewellery shipments, registering decline for the fifth straight month. 

Rs dips by 41p to 63.98 per $
 The rupee touched 64-level against the American currency after nearly two weeks before ending at 63.98 per dollar, falling by another 41 paise on <g data-gr-id="47">persisent</g> dollar demand from banks and importers on the back of firm dollar in the global market.

The rupee resumed lower at 63.60 per dollar as against the yesterday's closing level of 63.57 per dollar at the Interbank Foreign Exchange (Forex) Market and dropped further to 64.0050 per dollar after nearly two weeks before ending at 63.98 per dollar, showing a loss of 41 paise or 0.64 per cent.
Next Story
Share it