Consumer confidence in India falls first time in nine quarters

Rising inflation and fuel prices, which are a direct hit on the wallet, combined with a...

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IMF lowers India’s growth forecast to 6.1% for 2012

The multilateral lending agency said the cut was the steepest for any nation in view of the deteriorating global situation

Washington: The International Monetary Fund (IMF) has lowered India’s growth forecast by 0.7% to 6.1% for 2012—the steepest cut for any nation—in view of the deteriorating global economic situation, reports PTI.


The IMF, in its update of the World Economic Outlook, has also cut India’s growth projection for 2013 by a similar margin to 6.5%.


“In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness,” it said while updating its April Economic Outlook.


The IMF has reduced the global growth forecast for 2012 to 3.5% from 3.6%. For 2013, the growth forecast has been lowered to 3.9% from 4.1%, indicating that there are harder times ahead for economies.


“Downside risks to this weaker global outlook continue to loom large,” it said, adding that the most immediate risk is “still that delayed or insufficient policy action will further escalate the euro area crisis.”


As far as the emerging and developing economies are concerned, the growth projection for 2012 has been estimated at 5.6%, 0.1% below the earlier forecast made three months ago.


“Growth momentum has also slowed in various emerging market economies, notably Brazil, China, and India. This partly reflects a weaker external environment, but domestic demand has also decelerated sharply in response to capacity constraints and policy tightening over the past year,” the IMF said.


The Asian Development Bank (ADB) had last week lowered the growth forecast for India to 6.5% for the current fiscal, from the earlier 7%. According to official projections, Indian economy is expected to grow at 7.6% (+/- 0.25 per cent) in the current fiscal, April-March.


India’s economic growth fell to a nine-year low of 6.5% in 2011-12 fiscal. Last month, the World Bank had projected Indian economy to grow at 6.9% in the current fiscal.


The IMF said many emerging market economies have been hit by increases in investor risk aversion and perceived growth uncertainty, which have led not only to equity price declines, but also to capital outflows and currency depreciation.


For the emerging and developing economies, IMF said, “policymakers should adjust policies, given spill-overs from weaker advanced economy prospects and slowing export growth and volatile capital flows”.


The IMF cut its growth forecast for the crisis-hit Euro zone to 0.7% in 2013. It, however, maintained that the Euro zone would witness a 0.3% contraction in GDP in 2012.


“The situation in the Euro area crisis economies will likely remain precarious until all policy action needed for a resolution of the crisis has been taken,” IMF said.


The Washington-based multilateral lender has also trimmed the growth forecast of US by 0.1% for 2012 and 2013.


The IMF expects the US economy to expand by 2% and 2.3% in 2012 and 2013, respectively.


CMIE lowers auto production forecast to 9.6%

The rise in vehicle prices owing to the excise duty hike coupled with high interest rate and fuel prices have increased the overall cost of a vehicle, which deterring consumers from making new purchases

Mumbai: The Centre for Monitoring Indian Economy (CMIE) has lowered its automobile production forecast by a%age point to 9.6% for this fiscal on account of a persistent higher interest rate regime, hike in taxes and the resultant increase in vehicle prices besides an overall gloomy domestic economic climate, reports PTI.
"Automobile production is expected to grow by a moderate 9.6% this fiscal. This is lower than our earlier forecast of 10.6%," the city-based economic think-tank said in its monthly report.
The rise in vehicle prices owing to the excise duty hike coupled with high interest rate and fuel prices have increased the over all cost of a vehicle, the report said.
This, coupled with concerns over slowdown in the domestic economy, is deterring consumers from making new purchases, it said.
"Taking these factors into account, we have revised downward our production forecast across all the major segments of the automobile industry," CMIE said.
According to the report, commercial vehicles production, which clocked a healthy 19.8% growth last fiscal, is expected to come down to 8.5% in FY13.
While the light commercial vehicles segment is expected to do well, the medium and heavy commercial vehicle production may see a meagre 2.4% growth amid rise in truck rentals and higher ownership costs.
On the passengers vehicle side, the report forecast upswing in production from the onset of the festival season, adding the first half is expected to witness a slow growth.
"Production of passenger cars and vans is likely to rise 9.7% this fiscal. However, production of multi-utility vehicles is expected to grow faster at 19.7% aided by capacity addition and new model launches," the report said.
Two-wheeler production is expected to grow by a moderate 9.7% during the year, it added.


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