Low Export-GDP Ratio Makes India’s Economy Resilient To US Slowdown : Goldman Sachs

New Delhi, April 22 (KNN) A recent report by investment bank Goldman Sachs indicates that while the Indian economy maintains relative insulation from economic slowdowns in the United States, the stock markets of both countries demonstrate a notable correlation. 

The analysis emphasises India's comparatively lower trade dependency as a key factor in its economic resilience against external shocks.

According to the report, "While the Indian economy is relatively insulated from a US slowdown compared to other markets that have higher trade with the US, there is a strong correlation between Indian equity markets with the US market." 

This economic insulation stems largely from India's merchandise exports constituting approximately 12 percent of its GDP, significantly lower than China's 19 percent and Vietnam's substantial 82 percent.

The Goldman Sachs analysis observed that over the past two decades, India's GDP growth has experienced only minimal impact from global economic factors, with exceptions occurring during major worldwide crises such as the 2008 Global Financial Crisis and the COVID-19 pandemic of 2019-20.

Despite this economic resilience, the Indian equity market maintains a close relationship with its US counterpart. 

The report notes that the Nifty 50 Index has exhibited a strong correlation with the S&P 500 Composite Index throughout the past decade. 

The report also highlights that despite India's relatively insulated economy, certain sectors remain susceptible to US economic conditions. 

Merchandise exports and container traffic at Indian ports continue to be influenced by slowdowns in US growth. 

This vulnerability exists because the United States remains a significant trading partner, accounting for 17.7 percent of India's exports and 6.2 percent of its imports.

(KNN Bureau)