Slowest growth for India in 4 years
August 30, 2008
India’s economy in big trouble due to inflation and slowing growth caused by higher oil and food prices.An article written by Cherian Thomas publidhed in Shanghai Daily takes a look at India’s economic outlook :
INDIA’S economy grew at the slowest pace last quarter since 2004 as the fastest inflation in a decade and increased borrowing costs damped consumer spending.
Asia’s third-largest economy expanded 7.9 percent in the three months to June 30 from a year earlier, following an 8.8 percent gain in the previous quarter, the Central Statistical Organisation said in a statement in New Delhi yesterday. Analysts expected gross domestic product to increase 8 percent.
Inflation has almost tripled this year to 12.4 percent amid higher fuel and food prices, forcing the central bank to raise interest rates three times since June.
While growth is almost double, the average pace since India’s independence in 1947, it is slowing along with the other so-called BRIC economies of Russia, Brazil and China.
“We don’t expect India’s slowdown to be too dramatic,” said Philip Wyatt, a senior economist at UBS AG in Hong Kong. “There will be a gradual slowdown in GDP growth throughout this year – the industrial side of GDP is already slowing.”
India’s benchmark sensitive index, which has declined by a third this year, rose 3.7 percent to 14564.53 yesterday in the Bombay Stock Exchange. The rupee gained 0.4 percent to 43.935 against the US dollar. Finance Minister Palaniappan Chidambaram said yesterday that growth for the year to March 31, 2009, will be close to 8 percent.
India risks being overtaken by Russia as the world’s fastest expanding major economy after China this year. Russia’s economy may grow 7.1 percent in 2008, surpassing India’s 7-percent expansion this year, according to World Bank estimates.
Industry concerns
“High inflation and interest rates are issues that are bothering the industry as they have an impact on consumer demand and hurt corporate profitability,” said KV Kamath, chief executive officer at ICICI Bank Ltd, India’s second-largest lender. “Until we see inflation easing, it would be unrealistic to expect an easing of monetary policy.”
Services including banking, transportation and hotels grew 10 percent in the second quarter from a year earlier, slowing from an 11.2-percent gain in the previous three months, according to yesterday’s report. Agriculture increased 3 percent from an earlier advance of 2.9 percent.
Inflation can win or lose elections in India, where about 456 million people live below the World Bank’s poverty line of US$1.25 a day. Prime Minister Manmohan Singh’s Congress Party lost ground in nine of 11 state elections since January 2007 because of rising prices. General elections are scheduled to be held before May.
Singh said this month he doesn’t want growth to suffer in the battle against inflation.
In February, Singh wrote off US$17 billion of farm loans and this month increased salaries of about 5 million government employees by 21 percent to spur consumer demand.
The central bank’s forecast of 8-percent economic growth in the year to March 31 will be weakest expansion since 2003 and comes after Singh presided over record average annual growth of 8.9 percent since 2004.
The June-September monsoon, which accounts for four-fifths of the nation’s annual rainfall, was 39 percent below average in the week ended August 27, according to the weather office. A normal monsoon will help the country’s 234 million farmers harvest a bigger crop and boost rural incomes.
“Agriculture will hold the key for both industry and overall growth,” said Tushar Poddar, a Mumbai-based economist at Goldman Sachs.
Tags: chinese car park, China, urban parkingRelated Posts:
China’s CPI 6.3% rise in July
August 12, 2008
Aug. 12 (Xinhua) — China’s consumer price index (CPI), a measure of inflation, was up 6.3 percent in July, the National Bureau of Statistics announced on Tuesday.
The figure, compared with 7.1 percent in June and 7.7 percent in May, was broadly in line with most forecasts.
“The continuous decline of the CPI is a positive sign as it shows the government’s measures to ease inflationary pressures were effective,” said Zhang Xiaojing, an analyst with the Chinese Academy of Social Sciences.
Zhang attributed the decline to falling food prices and shrinking demand due to the economic slowdown.
Food prices, which account for more than a third of the CPI calculation, rose 14.4 percent in July, 2.9 percentage points lower than June and 6 percentage points lower than the growth for the first half.
The price of meat increased 16 percent, while that of pork rose12.1 percent. Cooking oil went up 30.8 percent, vegetables up 8.4 percent, aquatic products up 18.3 percent and grains up 8.6 percent.
In the first seven months of this year, the inflation indicator rose 7.7 percent from the same period last year: 7.4 percent for urban areas and 8.3 percent for the countryside.
The PPI for industrial products was up 10 percent in July over the same period last year, the highest since 1996, the bureau said on Monday.
The PPI rise would not immediately increase pressure on the CPI, said Zhang Liqun, a researcher with the State Council Development and Research Center.
Xu Lianzhong, an analyst from the National Development and Reform Commission, predicted that the PPI rise in August would be moderate and the CPI was expected to continue to fall in coming months.
However, some analysts believe the upside inflation risks remain strong, as producer price growth has been accelerating. Many businesses are believed to have squeezed profit margins in recent months, as the CPI has failed to reflect the surge in production costs. [Read more]
Tags: production, urban parking, china parking websiteRelated Posts:
Economy may grow 10.2% in Q3
August 8, 2008
CHINA’S economy may expand 10.2 percent in the third quarter, slightly higher than the 10.1 percent increase in the second quarter, the State Information Center predicted today.
The Consumer Price Index, the main gauge of inflation, may rise 6.6 percent through September, down 1.3 percentage points from the figure in the first half, said the research unit under the National Development and Reform Commission, the nation’s top planner.
“China’s economy will grow in a stable manner in the third quarter and the pace of price increases will slow down,” said analysts with the center in a report.
However, production costs will mount in the following months and add more pressure on companies, especially small- and medium-sized enterprises.
In June, the Producer Price Index, the factory-gate inflation gauge, rose to a 12-year high of 8.8 percent.
The center suggested the government provide more tax breaks for companies and encourage them to introduce more technology to digest the pressure brought by cost increases.
“The government should expand corporate subsidies and charge less in administrative fees to help companies weather the challenge,” said the report.
For example, the toll fee can be reduced to mitigate transport expenditures. To those pioneers in innovation or using new equipment to cut costs, the government can consider more tax breaks for them, it said.
In the first half, China’s fiscal reserves amounted to 1.19 trillion yuan (US$173.4 billion), making it possible for the government to adjust tax policies to bolster economic growth.
Meanwhile, China should make more efforts to increase supply and prevent price increases from growing into a deeply entrenched one, instead of mainly food-driven.
China should also choose “good timing” to raise prices of energy-related products and adopt economic measures to guarantee the production of daily necessities and those needed for the reconstruction in earthquake-hit areas.
Source: Shanghai Daily
Tags: chinese car parking, parking news, urban parkingRelated Posts:
Chinese currency set lower 5 days in a row
August 6, 2008
The central bank set the mid-point of the yuan’s exchange rate lower against the dollar for a fifth consecutive day Tuesday, stoking expectations for more fluctuations in the yuan’s exchange rate.
The yuan’s central parity rate stood at 6.8501 against the dollar Tuesday. Its traded peak came on July 17, when it was 6.8103 against the dollar.
Last week the yuan registered the largest weekly loss – 257 basis points – since the July 2005 exchange rate reform, which freed the yuan from a dollar peg and allowed it to float within managed bands.
Analysts said the yuan’s recent trend shows its previous rapid appreciation has failed to cater to policymakers, who have been fighting inflation but also want to ensure stable economic growth.
The yuan has appreciated by more than 6.6 percent so far this year while it appreciated by 6.9 percent against the dollar for the whole of last year.
While this has contributed to checking inflation, it has also driven many exporters to bankruptcy by increasing the prices of their products denominated in dollar.
“The faster yuan appreciation in the first half doesn’t seem to have gained any favors from the market and policymakers,” said Chen Xingdong, chief economist of BNP Paribas Peregrine Securities in Beijing.
Chen said the acceleration of the yuan’s revaluation has led to expectations of appreciation, influx of speculative capital and has hit the export sector. “It is detrimental to the economy.”
As a result, the central bank in its summary released after the second-quarter monetary policy committee meeting, has not mentioned – as it normally does – the use of market mechanism in deciding the value of the yuan. Analysts interpret the move as a sign of a policy shift.
“It indicates the central bank may no longer take yuan appreciation as a tool to fight inflation,” said Liu Dongliang, currency analyst with China Merchants Bank.
Policymakers may instead allow the yuan to rise with periodic falls to beat strong market expectations for appreciation, he said.
Liu held that the value of the yuan may continue to rise in the long term, but in the rest of this year, it will rise at most to 6.6 against the dollar. If the macroeconomic situation worsens, there would be substantial swings in the value of the yuan, according to him.
Chen from BNP Paribas Peregrine said the authorities should allow the yuan to fall to beat market expectations, although agreeing with the central bank’s view that the yuan’s value should be kept “basically stable”.
Source: China View
Tags: monetary policy, mechanical parking, currencyRelated Posts:
European inflation accelerates to 16-year high
August 1, 2008
Aug. 1 — Inflation in Europe accelerated to the fastest pace in more than 16 years in July after oil prices reached a record.
The inflation rate rose to 4.1 percent from 4 percent in June, the European Union statistics office in Luxembourg said yesterday. The rate, the highest since April 1992, matched the median estimate of 36 economists. A separate report yesterday showed unemployment remained at 7.3 percent.
Tags: costs, chinese car park, china parking websiteRelated Posts:
