New Delhi, Sep 22 (IANS): If the US economy falls into another recession, India is likely to suffer in terms of a slowdown in exports, instability in financial markets, increased unemployment as well as lower growth, according to global consulting major Deloitte.

The dependence of the Indian economy on the US has grown, which is evident from the fact that the US has been the second favourite destination for Indian exporters and the third largest source of foreign direct investment inflows in India, Delloite said.

"With such deep interconnectedness through trade, finance and confidence channels, it would be naïve to presume that India will be unaffected by the developments in the US economy," according to the D'conomics report by Deloitte.

"With a high degree of global financial integration, any reduction in the US balance of trade will have negative effects on many countries throughout the world. A depreciated dollar would diminish the value of reserves held by various countries, including India," the report added.

Cumulative value of exports for the April-August period has increased to $132.64 billion, while imports during the period increased to $189.44 billion, resulting in a trade deficit of $56.79 billion during the first five months of the fiscal.

However, India could well weather the crisis, if its agricultural output is robust and manufacturing and services sector pitch in with improved yields.

The report also indicated that India's global competitiveness is suffering while other countries are effectively eating into India's global share of world trade.

"The recently concluded trade and economic cooperation agreements with Singapore, Japan and Malaysia and the free trade agreement with ASEAN are important steps for Indian businesses to capitalize upon and improve their productivity such that the economy can continue to expand its productive capacity," said Deloitte.