A survey of 319 Chief Operating Officers and MDs by the Assocham reveals that 86 per cent respondents said growth in the Indian economy is not largely driven by domestic demand. As much as 45 per cent of India’s GDP comprises foreign trade including merchandise and services. An analysis of official data shows that about 60 per cent of India’s exports go to the US, Europe, China and Japan. Almost 72 per cent of the CEOs said that any downturn in American consumer spending and employment growth will have a direct impact on the European, Chinese and Japanese economies with which India finds itself largely integrated.
The signs of slowdown in US economy have started appearing. The non-farm payroll numbers in August have declined for the first time since 2003 as jobs fell by 4000 in last month. Private payrolls growth has slowed to average 70,000 in the past three months from 1,65,000 in the second half of 2006. “The problem of weakening housing prices in US and the sub prime mortgage crisis are indicative of declining trend of aggregate demand and consumer spending. This could decelerate the overall growth of US economy as consumer spending constitutes 70 per cent of the US economy GDP,” Assocham President Venugopal Dhoot said.
While only 23 per cent of the respondents felt that the strong Asian growth will sustain the economic growth in the event of a slowdown in the US.  Seventy-six per cent of them said that a widespread slowdown in world economic growth is inevitable.