Economic recession in Germany may impact certain export sectors from India

  • 29-May-2023
  • Economic recession in Germany may impact certain export sectors from India


According to Sanjay Budhia, chairman of the CII Committee on EXIM, the German economy is currently experiencing a recession, which is anticipated to have an influence on India's exports to Germany in a variety of industries, including chemicals, machinery, garments, and electronics.

However, he claimed that it is still too early to determine how the economic downturn in Germany will affect India's exports. Germany, the fourth-largest economy in the world, is in recession as a result of a 0.5% loss in GDP in the fourth quarter of last year and a 0.3% decline in the first quarter of 2023.

"In 2022, Germany received 4.4% of India's total exports, mostly from industries including organic chemicals, machinery, electronics, textiles, footwear, iron and steel products, and leather items according to import export data.

The aforementioned industries will probably be the ones most impacted, he said, adding that it was still too early to tell how the recession in Germany will influence exports from India.

He claimed that the recession that has affected Germany for two consecutive quarters is being felt throughout the entire European Union as a result of increased energy prices.

The EU will undoubtedly see contractionary pressures as a whole if its largest economy experiences a recession. Germany is the main destination for Indian exports, followed by the Netherlands, Belgium, Italy, and France, accounting for almost 14% of all exports from India to the EU, he continued.

He cited a paper in which the think tank Global Trade Research Initiative (GTRI) predicted that the recession will have an effect on India's USD 2 billion worth of exports, which include things like cellphones, clothing, footwear, and leather goods.

Germany ranks ninth in terms of total FDI into India from 2000 to 2022, and it has made cumulative investments totalling over USD 13.6 billion in industries like transportation, electrical equipment, metallurgy, services (particularly insurance), chemicals, building activity, trading, and automobiles.

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