|
| Indian economy may bottom out by 2009-end: report |
| Press Trust of India / Mumbai Aug 07, 2009, 21:14 IST |
|
The Indian economy is expected to bottom out towards end of the calender year, led by recovery in private investments and exports, a report has said.
"We expect India to bottom out near the end of the calender year. The key drivers are exports, softer lending rates, an additional fiscal stimulus and a recovery in private investments," Bank of America-Merrill Lynch Research said in its economic analysis here.
The recovery should be led by a turn in consumption cycle. Good harvests and a hike in government employees' salaries (the 6th Pay panel recommendations) are already buffering the consumer from the global recession as evidenced by strong sales of passenger cars and two-wheelers, it said.
Aggressive auto and home loan rate cuts by government-owned banks should also help revive urban consumer demand, and a recovery in demand should reduce job uncertainty in the financial, software, and export sectors, the report said.
The bulk of the quarter-million Indian jobs lost during the Sept 2008-March 2009 period were in these sectors.
On the investment side, the mix of softer lending rates and a reopening of external sources of project finance - external commercial borrowings and foreign investment in equity offerings - should help revive investment projects that are being postponed due to financing difficulties, the report noted.
The Indian government's infrastructure spending could also be stepped up, especially if proceeds from the sale of public assets and 3G auctions help to ease the financing constraints, it said.
"With micro policy visibly gaining traction and the global recovery in sight, we are becoming increasingly confident in the outlook for China," the research report said.
"We have raised our global GDP forecast as a result of a mid-year assessment of current conditions and of the economic outlook."
The forecast for global real GDP growth in 2009 remains at (-)1 per cent, while the 2010 forecast rises from 3.2 per cent to 3.7 per cent. The forecast upgrade comes almost entirely from the US and emerging economies, it said.
The forecast for emerging economies improves significantly, especially in the case of Asia, where China is now expected to post a 9.6 per cent growth rate in 2010, up from 8.3 per cent previously, and India is projected to grow 7.3 per cent versus the old forecast of 7.1 per cent.
The outlook for the smaller Asian economies also improves significantly, with the Korean forecast rising from 3 per cent to 4 per cent and Taiwan from 3.5 per cent to 4.5 per cent, it said.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
