According to exporters, India's exports of commodities to the European Union country from industries like garments, footwear, and leather goods are anticipated to suffer as a result of Germany's economy declining for two straight quarters.
Germany's gross domestic product (GDP), according to data provided by the Federal Statistical Office on Thursday, shrank by 0.3% from January to March. This comes after the largest economy in Europe saw a 0.5% decline in the fourth quarter of 2022.
Since other nations are already experiencing a recession, this would have an impact on both German and European exports from India, according to Sharad Kumar Saraf, a Mumbai-based exporter and the chairman of Technocraft Industries.
He said that India's exports to Germany, which totaled USD 10.2 billion in 2022–2023, might decline as a result of the country's protracted economic downturn. The leather, chemical, and light engineering industries would be the most negatively impacted.
Ajay Srivastava, co-founder of the economic research tank GTRI, said that the recession would negatively affect India's $2 billion in exports. This includes clothing, footwear, smartphones, and leather products. Daily usage items are the first to suffer during a recession.
The soon-to-be-imposed carbon border tax by Germany would have an influence on exports of iron and steel goods as well, he said.
The recession in Germany would have an impact on order flows into India, according to Narendra Goenka, chairman of the Apparel Export Promotion Council (AEPC).
“Business will decline by at least 10%. The investment flow from Germany would undoubtedly be impacted by this delay, Goenka said.
Germany is the ninth-largest investor in India, according to Saraf, and investments from that country may not be impacted as German businesses would be seeking for less expensive options during a recession.
German buying would be impacted by the crisis, according to Yogesh Gupta, regional chairman of FIEO (Eastern Region), as that country is the key engine of development for the EU.
However, it is still too early to remark on how the recession is affecting Indian exports, according to Gupta.
India exported to Germany USD 1.5 billion worth of machinery, USD 1.2 billion worth of electronics, including smartphones (USD 458 million), USD 990 million worth of apparel, USD 822 million worth of organic chemicals, USD 332 million worth of footwear, USD 305 million worth of leather goods, USD 474 million worth of articles of iron and steel, USD 406 million worth of auto parts.
Recession is often defined as two consecutive quarters of decline, however economists on the euro area business cycle dating committee utilise a wider range of data, including employment statistics.
One of the 20 nations that utilise the euro is Germany.
