Will Indian exports take a hit in 2023? Here’s all you need to know

By India Today Business DeskIndia’s exports are likely to take a hit in the next fiscal year starting April 1, 2023, due to tighter monetary policy that has already started hurting global demand.

The Ministry of Finance said in a monthly economic report that global trade growth fell in 2022 and the trend is likely to continue in 2023, with volume and value of trade declining further.

The report showed high frequency indicators like monetary tightening have already started impacting global demand. “This may continue in 2023 as various agencies have forecasted a decline in global growth,” it added.

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But monetary tightening is not the only reason that has weakened the outlook for exports. Other factors like fears of a looming recession and rising geopolitical tension due to the Ukraine-Russia conflict will also dampen global growth.

The ministry also added in its report that geopolitical tensions and supply chain disruptions arising out of it could aggravate the global slowdown.

Even with lower export growth, India is projected to be the fastest-growing major economy in the next financial year, said the report. The International Monetary Fund projects India’s economy to grow at 6.1 per cent in 2023, while the World Bank has estimated the country’s GDP at 6.6 per cent.

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However, overall growth will depend on a lot of factors other than exports, including evolving inflation trends. Inflation stayed within the Reserve Bank of India’s upper tolerance limit of 6 per cent in November and December, before sharply rising to 6.52 per cent in January.

This could force the RBI to maintain a tighter economic policy to control inflation, ultimately resulting in slower economic growth.