Effects of Economical Slowdown on Import-Export Business

Life and economy, both are like a symphony of up and down notes. So, if the economy can peak, it can bow down as well. In fact, the latter scenario is occurring more now days. And even when it doesn’t, the commercial market is always vulnerable to the threat of an economical slowdown. An economical slowdown is a phase where financial trends pertain to growing unemployment, unhealthy stock market, decrease in GDP, and drop in personal income & sales etc. As a decline in the GDP translates to economical slowdown, this period precedes recession.

As economy and the business sector, both have a major commercial angle hence the slowdown in the former would affect the latter for sure. The initial effect is the decline in the consumer spending because of the loss in income (it’s the spending that drives much of an economy). Any economy consists of imports and exports by parts. So, less spending translates to less demand; less demand eventually converts to less supply. Hence, the chain of import and export gets affected severely. This chain worsens during the post economic process – the recession.

The commercial entities getting affected by a slowdown would try cutting down some of the below tasks:

• No or less hiring of new employees
• No or less buying of new equipment and machinery
• Limiting or a complete restrain on research and development
• May be no new product rollouts

On the overall, expenditures are reduced in everything from marketing to production and so on.

Economical slowdowns affect the import and export business like a viscous cycle; one thing goes down, then another and the effect multiples. Due to slowdowns, companies’ stock price and dividends may decline; the investment in public companies gets decreased due to the ‘investment withdrawal’ phenomenon.

In addition, it has been observed that during and post slowdowns, marketing strategies get altered. And on such occasions, the import-export business planning is chaos, leading to more chaos. Lastly, not everything gets affected negatively as many manufacturers try to get even with the import-export loss by flooding the local market with goods and services laced with attractive discounts and products at throwaway prices.

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