As per the global financial major HSBC, India's domestic demand is likely to recover from the recent slowdown mainly driven by the growing population and nascent middle-class generating a growing market for consumption goods. Indian economy’s growth slowed down to a decade low at 4.5 percent in FY13 and 4.6 percent during the first three quarters of FY14.
Referring to India’s trade outlook, the report noted that strong growth prospect of the US and UAE, the top two export destinations of India, would help the country to boost foreign sales. Though, UAE and the US are likely to remain top destinations until 2030, exports to China will also expand rapidly. Oil-rich markets in the Middle East and North Africa would also continue to drive exports from India. The report added that near term outlook for trade flow for India is weak on account of depreciating rupee against the dollar. Though, weak rupee is beneficial for exports, but the positive impact of a weaker currency is likely to be offset by rising inflation, the HSBC report added. India's Trade Confidence Index (TCI) fell considerably to 126 in H2 2013, indicating that the near-term trade outlook is less bright than six months ago. Meanwhile, long term trade outlook remain bright for emerging economies like India. During April-February’FY14, value of exports increased by 4.79% to $282.78 billion as against $269.86 billion in the same period of previous fiscal year.