Slowdown in US economy(part-2)

To what extent is India likely to be impacted by the slowing of the US economy?

The slowdown in the US will have a ripple effect across the world, though the impact will vary across different regions. All those economies that are export-oriented in nature, which means that a large part of the output in the country is exported, will face a more severe impact than others. Most South East Asian economies fall under this category. India, for example, is not a very highly export-driven economy. What this means is that there is a lot of internal demand in the country that will keep the economy running and while some exports might be affected, there is enough local demand for the time being to keep things going. In the equity market, the impact of the slowdown will vary according to the exposure of a particular company to the US market.

What will be the impact on sectors by a US slowdown?

There are some areas where the goods are being directly imported by the US and this could range from a range of textile products to individual item like jewellery where there would be an impact. But there can also be an indirect threat to several other areas like the information technology area where one might see that companies have reduced the additional contracts that they are going to give to Indian companies. However, there is no clear demarcation of the indirect impact because there might be some companies in the US who undertake additional outsourcing in order to control costs in a tight situation.