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‘Weak exports to hit growth by 0.40 percentage point in 2015′


New Delhi: A slowdown in exports is likely to bring down India’s growth rate by 0.40 percentage point in 2015, a report by global brokerage firm HSBC has said.

The outlook for exports in 2015 is not very encouraging as global growth remains lethargic and pace of removing domestic bottlenecks remains gradual, the report said.

“The ‘true’ impact of weaker export growth means that GDP growth will likely be 40 bp (0.40 percentage point) lower in 2015, though this could reverse in 2016 if exports pick up,” HSBC India Chief Economist Pranjul Bhandari said in a research note today.

“2015 may not be a great year for Indian exporters. World growth continues to remain sluggish and domestic bottlenecks (stalled projects from last year) are still lingering. However, if we chip away at resolving domestic bottlenecks, this could change,” HSBC said.

Auctioning coal mines to the private sector to restart electricity projects, pressing ahead with necessary land acquisition for road building or easing bureaucratic hurdles in the attainment of licences will help Indian exporters gain competitiveness.

“The ‘true’ impact of slowing exports growth in 2015 would be 40 bps shaved off from GDP growth. On the other hand, as exports recover in 2016, the ‘true’ impact of exports could add 70 bps to GDP growth,” Bhandari said.

According to HSBC, export growth will soften not only in value but also in volume terms through 2015.

Meanwhile, the brokerage has revised higher its oil price assumption to USD 68 per barrel in end-2015 from USD 62 per barrel earlier.

Accordingly CAD is likely to widen marginally to 1.5 per cent of GDP in financial year 2015-16, HSBC said.

As per the official data, India’s exports contracted by about 14 per cent in April to USD 22 billion due to a sharp dip in petroleum, gems and jewellery shipments, registering decline for the fifth straight month.

The slump in exports was mainly due to global slowdown and softening of crude, metal and commodity prices. Meanwhile, imports too declined by 7.48 per cent to USD 33 billion, leaving a trade deficit of USD 11 billion in April.

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