India is vulnerable to the global slowdown this year led by advanced economies. So says Crisil.

The European Union (EU) accounts for 46 per cent and 42 per cent of India’s leather and footwear exports respectively.Likewise, the US commands a large share in items made up of textiles and rags. India’s domestic labour-intensive sectors such as textiles, footwear, and leather depend significantly on these two regions. Such a high concentration of exports (especially on discretionary items such as textiles and leather products) to these two regions makes domestic exporters vulnerable to a slowdown in their economies.

India’s growth cycles have become highly synchronised with those of advanced economies over the years. The most important and direct impact of this will be reduced demand for Indian goods abroad. The US and the EU are two of the largest destinations, accounting for 18 per cent and 15 per cent, respectively, of India’s merchandise exports in fiscal 2022. And exports to these two regions have been on a declining trend since July 2022, barring a slight uptick in November and December, which could be a reflection of festive demand towards the year end.

Global economic activity is projected to slow down in 2023 as the peak impact of synchronised monetary policy tightening across major economies manifests.