Signs of global slowdown: Export credit demand falls by 25 percent in October

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New Delhi: Demand for credit from Indian exporters fell 25.1 percent year-on-year in October, reflecting the impact of slowing global trade. Merchandise exports fell below $30 billion for the first time in 20 months. Exports fell by 17 percent year-on-year and 16 percent sequentially.

Figures released by the Reserve Bank of India show that bank credit has seen a robust growth of 18 per cent despite a decline in export credit.

The Federation of Indian Export Organizations said global trade is facing headwinds due to geopolitical tensions, rising inflation, looming recession and currency volatility. Lack of liquidity is a major challenge for exporters. Banks' insistence on collateral is depriving many MSMEs of credit. The share of export credit in total net banking credit has been steadily declining.

Experts say that the weakness of the global economy may add to the woes of Indian exporters. Due to the Covid-19 lockdown, China's exporters are suffering and they have left a gap in the global trade. Indian exporters should seize the opportunity. These opportunities may disappear as China moves back from its zero covid policies. All stakeholders need to understand this.

Demand for Indian exports is likely to pick up in 2024 as the recession peaks in 2023 and falling commodity prices reduce the value of exports. Recently, the International Monetary Fund cut its 2023 global GDP and world trade forecasts by 20 basis points and 70 basis points to 2.7 percent and 2.5 percent, respectively.

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