Industrial production expected to continue to decelerate

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Dun & Bradstreet India , today, released its monthly economic forecast of key economic indicators - " Dun & Bradstreet Economy Observer " for August 2007. 

 

Key Economic Indicators

	Forecast	Latest Period		Previous Period
W.P.I	4.5- 4.8% (Aug-07)	4.4%(July-07)		4.3%(June-07)
IIP Growth	9.50% (July-07)	9.8%(June-07)		11%(May-07)
91-day-T-Bills	6.5 - 7% (Aug-07)	4.5%(July-07)*		7.4%(June-07)*
INR/US$	40.20-40.50 (Aug-07)	40.42(July-07)		40.77(June-07)
all figures are monthly average, (y-o-y)
* end of the month

 

The industrial sector is beginning to feel the pinch of higher interest rates. Weak consumer demand and rising input costs have forced many manufacturers, particularly in the auto sector, to scale down production. The recent appreciation of the rupee vis-à-vis the dollar has dented external demand as well, as has been witnessed by the export growth rates. Corporate profitability seems to have decelerated in recent months as high interest rates, higher input costs and an appreciating rupee has weighed down the performance of the sector. However, production data points toward continued buoyancy in investment activity; the production in the capital goods sector grew by a remarkable 29% in June 07.

 

"With this forecast, the Index of Industrial Production is expected to decline for the third month in a row in this fiscal. We could witness a possible slow down in economic growth for the first quarter, when the numbers for the same become available," said Mr. Kaushal Sampat - Chief Operating Officer, Dun & Bradstreet India. "Investment activity, however, remains buoyant, indicating robust fundamentals. Supply side constraints ought to ease on the strength of this investment; we therefore remain optimistic about long term growth," he said.

 

Dun & Bradstreet Economy Observer provides forecasts for key economic indicators such as WPI, IIP Growth, 91 day-T-Bills rates and Exchange rate. It also gives a round up of the latest developments in real economy, price scenario, money market, and external sector. Prepared by the Economic Analysis Group at Dun & Bradstreet India, it is an outcome of the group's long experience with tracking the Indian economy and its various sectors. Building on its innate skills and capabilities, the Economic Analysis Group has launched this forecast of key economic variables based on its proprietary econometric model. 

 

Sourced From: Dun & Bradstreet Information Services India Pvt Ltd