Road to recovery?

A series on the downturn in the global economy and its probable recovery

Signs of recovery, but demand still a key challenge

By Rajesh Bhayani

While both globally and in India we are still far from a meaningful recovery in economic growth, there are indicators suggesting that some recovery is on the horizon. The first part of the 'Road to Recovery?' series, on Wednesday, talked of macro indicators like purchasing managers’ index (PMI) and gross domestic product ( GDP) growth, which point to some recovery. Even on the commodity front, there are indications that things are looking up.

Take, for instance, the recent rise in metal prices on the London Metal Exchange ( LME). Tin, aluminium and zinc have gained between 11-13 per cent since the start of November 2012, while nickel, lead and copper are up between three and eight per cent during the same period. Gains across a section of commodities have led to the US-based CRB All Commodities Index rising 1.5 per cent in the last one and a half months.

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Green markers dot the globe, hold promise for a better 2013

By Malini Bhupta

There’s a question that seems to plague everyone these days — why are foreign institutions relentlessly pumping dollars into Indian equities, even as the macroeconomic scene doesn’t look any better? Till about August, macroeconomic data emanating from India and other economies had only shown growth contractions and rising deficits but of late, there’s been a slight shift. From an uptick in industrial activity and economic growth to rising export orders, green markers are visible not just in India but even globally.

Indian markets have already factored in the known downside risks (twin deficits and below potential growth) and moved on to more current data, which seems to suggest that a recovery, however modest, could be under way. So where’s the cheer? For starters, the eight core sector industries (coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity) grew 6.5 per cent in October, after revised numbers showed a five per cent growth in the previous month. The core sector growth is at an eight-month high, indicating some kind of a revival in industrial activity. It’s apparent the market is discounting the weakness recorded by industrial production in the last couple of months.

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