Economic momentum has decelerated sharply at a time of weak external demand and limited monetary or fiscal stimulus, says Nomura Economics Research in its report on the Indian economy
India’s non-agriculture GDP (gross domestic product) growth fell to 5.2% year-on-year in Q4 2012 from 5.8% in Q3. Nomura’s leading index suggests that non-agriculture GDP growth is unlikely to recover in the coming two quarters. Rather, it suggests a prolonged bottoming-out
Note: The constituents of Nomura’s CLI (composite leading index) are real M2 money supply, non-oil imports, equity returns, the repo rate, real bank credit and industrial output. Nomura’s CLI estimate for Q3 2013 is based on preliminary data.
Economic momentum has decelerated sharply at a time of weak external demand and limited space for monetary or fiscal stimulus. The effect of weak manufacturing output is hurting demand for private services. Government reforms are likely to have a meaningful impact only after a phase lag.
Activity data has been mixed with a rebound in January 2013 related to industrial output. Vehicle sales have been disappointing in February 2013. India’s growth from Q4 CY2013 will be aided by better global demand and a pickup in government spending ahead of elections.
Nomura’s GDP growth forecast is 5.6% year-on-year in FY14.
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