Between 2011 and 2012, share of SAARC’s export to euro area has contracted significantly (Table 1). In addition to absorbing a significant share of the region’s exports, it has been a source of foreign direct investment and other forms of capital flows (Lee et al. 2013)4.
It is interesting to note that when the euro area crisis hit the global economy in 2010, our exports to that region did not decline immediately. This was mainly because of our two major trading partners, viz., Germany and France, which were doing well. In the subsequent period, as the crisis intensified, our exports to euro area declined (Chart 2).