http://timesofindia.indiatimes.com/...very-in-sight-Moodys/articleshow/24301684.cms
COIMBATORE: The current economic slowdown would bottom out and a recovery is in sight, according to Moody's Analytics, a division of Moody's Corporation. The agency has, however, cautioned that the days of high growth are gone and the country would have to settle for a more modest growth rate.
"A combination of good luck and modestly better policies will drive steady acceleration in economic activity, although the upturn will be patchy and difficult to see for six months or so. The days of 8% GDP growth are gone," said Glenn Levine, senior economist, Moody's Analytics.
"We expect the Indian economy to hit its potential growth rate of 6.5% by the second half of 2015," he said. "India's economy has been slowing for the past three years but is nearing the bottom of the current cycle," Moody's said. "Weak investment and consumer demand have slowed India's growth over the past three years," it said. GDP (gross domestic product) growth by production slowed to 4.4% year-on-year (y-o-y) in the second quarter and looks to be maintaining this pace through the rest of 2013, the agency said.
Investment should improve from the fourth quarter as the government has been actively trying to restart stalled investment projects, both from the public and private sectors. But the recovery will be modest, as weak business sentiment will take time to turn around, Moody's said. Fixed investment, which was flat in 2013, would grow 3.5% in 2014, it said.
"The consumer slowdown is well-entrenched with discretionary spending especially weak. We expect this weakness to persist through 2014 before a return to trend growth in 2015," Levine said. The fall in consumer and business demand along with weaker exports has led officials to highlight the cyclical nature of the slowdown. "There is some truth to this, but it obscures the likelihood that at least part of the slowdown is structural in nature," Moody's said.
Weaker investment reduces productive capacity and not all of this will be regained in the eventual upswing, it said. "At the very least, the past three years have led investors and businesses to reassess the entire India story. Expectations of 8% or better GDP growth have been supplanted by a more realistic assessment of 6% or 7%," the agency noted. "This shift in expectations and its self-fulfilling consequences suggest a structural component to the slowdown," it said.
COIMBATORE: The current economic slowdown would bottom out and a recovery is in sight, according to Moody's Analytics, a division of Moody's Corporation. The agency has, however, cautioned that the days of high growth are gone and the country would have to settle for a more modest growth rate.
"A combination of good luck and modestly better policies will drive steady acceleration in economic activity, although the upturn will be patchy and difficult to see for six months or so. The days of 8% GDP growth are gone," said Glenn Levine, senior economist, Moody's Analytics.
"We expect the Indian economy to hit its potential growth rate of 6.5% by the second half of 2015," he said. "India's economy has been slowing for the past three years but is nearing the bottom of the current cycle," Moody's said. "Weak investment and consumer demand have slowed India's growth over the past three years," it said. GDP (gross domestic product) growth by production slowed to 4.4% year-on-year (y-o-y) in the second quarter and looks to be maintaining this pace through the rest of 2013, the agency said.
Investment should improve from the fourth quarter as the government has been actively trying to restart stalled investment projects, both from the public and private sectors. But the recovery will be modest, as weak business sentiment will take time to turn around, Moody's said. Fixed investment, which was flat in 2013, would grow 3.5% in 2014, it said.
"The consumer slowdown is well-entrenched with discretionary spending especially weak. We expect this weakness to persist through 2014 before a return to trend growth in 2015," Levine said. The fall in consumer and business demand along with weaker exports has led officials to highlight the cyclical nature of the slowdown. "There is some truth to this, but it obscures the likelihood that at least part of the slowdown is structural in nature," Moody's said.
Weaker investment reduces productive capacity and not all of this will be regained in the eventual upswing, it said. "At the very least, the past three years have led investors and businesses to reassess the entire India story. Expectations of 8% or better GDP growth have been supplanted by a more realistic assessment of 6% or 7%," the agency noted. "This shift in expectations and its self-fulfilling consequences suggest a structural component to the slowdown," it said.
