Euro crisis to impact export growth: CARE

Credit rating agency CARE today said India's exports growth is likely to be hit in the coming months due to eurozone crisis.

"Though India is primarily a domestic economy, India's exports are positively linked to the global economic growth. This is likely to adversely impact India's export growth in the coming months," CARE said in a report titled 'Impact of Euro crisis and global slowdown on India'.

However, it said the growth will be only marginally affected by the slowdown in the euro region debt-stricken countries as our exposure is low.

"Average elasticity between India's exports and the advanced nations or the euro region's GDP is 0.18," it said.

It is observed that in 2010-11, India's exports to the European region and US moderated. However, the country's exports to the Asian and the African region, which have a greater share in India's exports, grew during this period, it said.

The report also said that the FDI has not been significantly affected by the crisis while the FIIs are showing outflow in the last couple of months.

It, however, noted that the software services and other export oriented sectors would benefit from the rupee depreciation.

India's earnings from the software sector have been increasing steadily over the years at 27.7%. In 2008-09, the world economic growth slowed to -0.7% but software services continued to increase, albeit at a slower rate, it said.

In the first 8 months of 2011, the rupee had been stable in the range of Rs 44-45 per Dollar. A depreciating trend became stark since Aug 2011.

The rupee has depreciated by 18% against the Dollar and by around 9% against the euro since Aug 2011.