Investments are unlikely to pickup in a hurry given weak demand and increased leverage on corporate balance sheets in India
Investments are unlikely to pickup in a hurry given weak demand and increased leverage on corporate balance sheets, says Nomura in a research note based on data from Centre for Monitoring Indian Economy (CMIE).
“However,” it says, “a gradual upturn in the global growth cycle and a stable government with the right policies may gradually revive the investment cycle over the course of 2015-16. Given the central role that investments play in driving potential growth, we will be tracking this data closely.”
New investment projects moderated to 1.7% of GDP in Q1 2014 from 4.9% in Q4 2013. The fall is not surprising; the rise in Q4 investment was led by government-owned companies, which tends to be more volatile, and has likely reversed due to the upcoming elections. Private sector investments, which are more stable, rose marginally.
On a four-quarter rolling total basis, new investment projects stood at 3.5% of GDP in Q1, broadly similar to levels in 2013. This suggests that the slowdown in investments, which started in 2008-09, has come to an end. New investments are stabilising, but at very low levels, concludes the research note. This observation is shown in the graph below:
Note: GDP for Q1 2014 are Nomura estimates. Source: CMIE, CEIC and Nomura Global Economics.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
Fiercely independent and pro-consumer information on personal finance.
1-year online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
30-day online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
Complete access to Moneylife archives since inception ( till the date of your subscription )
