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Worst is not over for Indian economy: Moody`s
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Worst is not over for Indian economy: Moody`s
The Indian economy is unlikely to grow more than five percent in 2009 as "the worst of the global economic crisis is yet to come", according to the research arm of the global rating agency Moody`s.
"GDP (gross domestic product) growth will unlikely exceed 5 percent in 2009, but a rebound in the opening quarter of 2010, which is dependent on a US rebound in the December quarter, should lift annual expansion to about 5 percent for 2009-10," said Sherman Chan, an economist with Moody`s Economy.com, Friday.
Calling the government`s projection that the economy would grow 7.1 percent this fiscal "wildly optimistic", Chan said: "The positive sentiment is expected to be short-lived. India essentially only started feeling the pinch of the global downturn in the December quarter and the worst is yet to come."
Economy.com expects another notable slowdown in the last quarter this fiscal which would bring down the annual growth rate to about 6.3 percent.
"Market sentiment is still unstable in India. So far in 2009 there has been a net outflow from the Indian stock market as the global turmoil drags on," it said in a report.
However, foreign direct investment has been reportedly strong in the current quarter, rebounding from a massive 25 percent year-on-year decline in the third quarter.
The report said long-term investors would continue to see India as a potential destination, while speculators would flee the country if the situation worsened further.
"More portfolio investment could be withdrawn in coming months if India`s economic outlook worsens," it said.
The agency also expressed concerns over the tight liquidity situation in India.
"Firms are not only issuing bonds to raise funds, but now also use the option of deposit taking. As the current focus of many firms is to refinance debt and survive the financial turmoil, investment is expected to be subdued this year," it warned.
"GDP (gross domestic product) growth will unlikely exceed 5 percent in 2009, but a rebound in the opening quarter of 2010, which is dependent on a US rebound in the December quarter, should lift annual expansion to about 5 percent for 2009-10," said Sherman Chan, an economist with Moody`s Economy.com, Friday.
Calling the government`s projection that the economy would grow 7.1 percent this fiscal "wildly optimistic", Chan said: "The positive sentiment is expected to be short-lived. India essentially only started feeling the pinch of the global downturn in the December quarter and the worst is yet to come."
Economy.com expects another notable slowdown in the last quarter this fiscal which would bring down the annual growth rate to about 6.3 percent.
"Market sentiment is still unstable in India. So far in 2009 there has been a net outflow from the Indian stock market as the global turmoil drags on," it said in a report.
However, foreign direct investment has been reportedly strong in the current quarter, rebounding from a massive 25 percent year-on-year decline in the third quarter.
The report said long-term investors would continue to see India as a potential destination, while speculators would flee the country if the situation worsened further.
"More portfolio investment could be withdrawn in coming months if India`s economic outlook worsens," it said.
The agency also expressed concerns over the tight liquidity situation in India.
"Firms are not only issuing bonds to raise funds, but now also use the option of deposit taking. As the current focus of many firms is to refinance debt and survive the financial turmoil, investment is expected to be subdued this year," it warned.
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Enter your comment:
Rohith 23-03-2009
Hi,
Thanks for the valuable information. I have a concern - why is that every one talking about recession, economy going bad to worse and stuff which is spreading so much of negativity. All that we need now is hope and support, please use your brains and think of a solution to overcome this hurdle.
Talk about do`s and don’ts during recession, how to over come stress. There is so much of talent available in the market - business guru`s, management guru`s, thousand`s of management graduates passing out from IIM`s, IIT`s and many such premier institutes. Why can`t we make a advisory body comprising of them and provide possible solutions to corporate and government.
I blame the media for this situation for the simple reason being the impact that these channels have on public. Because of fear public has become conserve and acting safe which will make them spend less this inturn decreases the GDP.
Let’s start think positive. Cheers!!!!!!!!
Thanks for the valuable information. I have a concern - why is that every one talking about recession, economy going bad to worse and stuff which is spreading so much of negativity. All that we need now is hope and support, please use your brains and think of a solution to overcome this hurdle.
Talk about do`s and don’ts during recession, how to over come stress. There is so much of talent available in the market - business guru`s, management guru`s, thousand`s of management graduates passing out from IIM`s, IIT`s and many such premier institutes. Why can`t we make a advisory body comprising of them and provide possible solutions to corporate and government.
I blame the media for this situation for the simple reason being the impact that these channels have on public. Because of fear public has become conserve and acting safe which will make them spend less this inturn decreases the GDP.
Let’s start think positive. Cheers!!!!!!!!
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