India's GDP growth has peaked in the first quarter and going ahead some moderation is expected as weaker rupee and rising oil prices remain two major headwinds for the Indian economy, Credit Suisse said.
As on Sept 17, 2018, Sensex drooped by 4% and USD INR also shed 4% during this month. INR lost almost 13% against USD, during 2018 and earned dubious distinction of the worst performing Asian currency against USD this year. Some reports point out that Indian economy is better than only Turkey, Argentina and Venezula, which is worry some. Weakening rupee, rising oil prices, widening current account deficit, inflation & interest rates ready to take off, our economic pundits are clueless of what to do and are simply staring. Any thoughtless intervention will only widen CAD pushing inflation up. Not intervening while economy is on slippery slope is also wrong. Steadily FE reserves are getting depleted. No reserves are adequate enough, when economy is facing headwinds.
- The 8.2% GDP growth for the April-June 2018 quarter of this year, though "encouraging", was largely owing to base effects.
- The Indian economy grew at 8.2% on good show by manufacturing and farm sectors, according to official data.
- Monsoon deficit is now at 6% and the acreage under kharif sowing is flat year-on-year.
- Weaker rupee and rising oil prices remain two major drag factors for the economy. These two headwinds could turn out to be a double whammy for India, exerting an upward pressure on inflation and downward pressure on growth, the report said.
- The core inflation is inching up and all these factors could prompt the RBI raise interest rates. Higher interest rates will have a negative impact on growth expectations.
- On the positive side, Credit Suisse expects economic growth to gradually get support from strengthening bank balance sheets as more companies exit bankruptcy, and as GST implementation progresses further which should provide a much more conducive environment for the investment growth to pick up.
As on Sept 17, 2018, Sensex drooped by 4% and USD INR also shed 4% during this month. INR lost almost 13% against USD, during 2018 and earned dubious distinction of the worst performing Asian currency against USD this year. Some reports point out that Indian economy is better than only Turkey, Argentina and Venezula, which is worry some. Weakening rupee, rising oil prices, widening current account deficit, inflation & interest rates ready to take off, our economic pundits are clueless of what to do and are simply staring. Any thoughtless intervention will only widen CAD pushing inflation up. Not intervening while economy is on slippery slope is also wrong. Steadily FE reserves are getting depleted. No reserves are adequate enough, when economy is facing headwinds.
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