Even though the uncertain financial situation in Europe and the Middle East warrants caution, there are stll several reasons for optimism on the domestic front
In line with regional trends, India’s economy surged in the March quarter. GDP growth accelerated to 8.6% y-o-y, the fastest since 2007 and around India’s trend rate. The drivers of growth were similar to the rest of Asia. From an expenditure perspective, exports and investment fuelled growth as government consumption faded. On an industry basis, the main growth drivers were manufacturing, construction and services related to retail trade, financial markets, transportation and businesses.
While India’s y-o-y growth rate was slower than most East Asian and ASEAN economies, in many ways it was more impressive. Unlike other economies, India’s GDP growth was not inflated by a low-base effect, as the economy managed to maintain steady growth throughout the global recession. India is the only Asian economy where consumer price inflation has spiked, which has weighed heavily on production growth of nondurable consumer goods. Growth was also dragged down by weakness in the agricultural sector, which employs around half the workforce and has strong linkages with the broader economy.
One of the bright spots of the first quarter national accounts was surging investment, which grew at the fastest pace since the first quarter of 2006. From 2007 to 2009, weakening foreign capital flows and falling business confidence weighed on private investment. But following several years of subdued investment and the recent spurt in demand, capacity utilisation has risen. With business confidence and foreign capital flows up sharply over the past year, private investment has surged.
Encouragingly, strong growth in investment spending looks to carry over into the June quarter. Loan demand appears to have risen sharply as surplus funds in the banking system have rapidly fallen in the past two months. Credit growth has picked up, while purchasing managers’ indices indicate new orders are rising at a strong pace.
In line with regional trends, India’s economy surged in the March quarter. GDP growth accelerated to 8.6% y-o-y, the fastest since 2007 and around India’s trend rate. The drivers of growth were similar to the rest of Asia. From an expenditure perspective, exports and investment fuelled growth as government consumption faded. On an industry basis, the main growth drivers were manufacturing, construction and services related to retail trade, financial markets, transportation and businesses.
While India’s y-o-y growth rate was slower than most East Asian and ASEAN economies, in many ways it was more impressive. Unlike other economies, India’s GDP growth was not inflated by a low-base effect, as the economy managed to maintain steady growth throughout the global recession. India is the only Asian economy where consumer price inflation has spiked, which has weighed heavily on production growth of nondurable consumer goods. Growth was also dragged down by weakness in the agricultural sector, which employs around half the workforce and has strong linkages with the broader economy.
One of the bright spots of the first quarter national accounts was surging investment, which grew at the fastest pace since the first quarter of 2006. From 2007 to 2009, weakening foreign capital flows and falling business confidence weighed on private investment. But following several years of subdued investment and the recent spurt in demand, capacity utilisation has risen. With business confidence and foreign capital flows up sharply over the past year, private investment has surged.
Encouragingly, strong growth in investment spending looks to carry over into the June quarter. Loan demand appears to have risen sharply as surplus funds in the banking system have rapidly fallen in the past two months. Credit growth has picked up, while purchasing managers’ indices indicate new orders are rising at a strong pace.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
