New Delhi, April 1 (IANS) With giant economies like the US and Europe continuing to reel under recession, Indian exporters face tough times ahead, the economic analysis arm of global rating agency Moody's said Wednesday.
'Tough times for Indian exporters will last for some time yet as giant economies such as the US and Europe are still deep in recession,' said Sherman Chan, an economist with Moody's.com, in a statement.
'The government will continue to be under pressure to support struggling export-oriented manufacturers in coming months,' Chan added.
Exports declined in February for the fifth straight month, and the fall was the sharpest in more than a decade, Moody's said.
The statement coincided with the Indian government announcing Wednesday that the country's exports dipped 21.7 percent in February to Rs.58,685 crore ($11.91 billion), as compared to Rs.60,476 crore ($15.22 billion) in the corresponding month last year.
Exports figures have been contracting since last October, forcing the commerce ministry to revise the target for 2008-09 to $175 billion from $200 billion following fall in overseas demand.
'The result is unwelcome, but not surprising. The current global economic environment is perhaps the worst in decades. Businesses and consumers around the world have cut back on spending, and international trade has therefore slumped in recent months.
Indian exporters are certainly not immune from the global downturn, Moody's noted, adding that the import bill too is shrinking.
'Demand in India may have softened, which cut import consumption, but an equally important factor that has contributed to the tumble in the headline import figure is the massive fall in global commodity prices,' Chan said.
India is a net oil importer, she said, adding: 'So the sharp decline in global oil prices since July has been a great help in containing India's import payments, hence the trade deficit.'
According to Chan, imports would likely remain in the negative territory in coming months, reflecting the subdued global commodity prices and decline in domestic demand.
'As investment is set to slow considerably this year, demand for overseas capital goods will be muted. Meanwhile, a moderation in household demand will also drag on imports of consumer goods,' Chan said.
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