Indias weak GDP sparks slew of downgrades

From gasping elephant to stagflation, analysts have panned India's quarterly growth of 5.3% with some ominous language. India's growth in January-March was its weakest in nearly a decade, and sparked a new round of economic downgrades from investment banks, with Morgan Stanley cutting India's forecasts for the second time in as many weeks.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead GrowMyMoney IThe Winning Leap SME Special
Moneycontrol

Home » News » Economy

Jun 01, 2012, 03.54 PM | Source: Reuters

India's weak GDP sparks slew of downgrades

From "gasping elephant" to "stagflation", analysts have panned India's quarterly growth of 5.3% with some ominous language. India's growth in January-March was its weakest in nearly a decade, and sparked a new round of economic downgrades from investment banks, with Morgan Stanley cutting India's forecasts for the second time in as many weeks.

Like this story, share it with millions of investors on M3

Indias weak GDP sparks slew of downgrades

From "gasping elephant" to "stagflation", analysts have panned India's quarterly growth of 5.3% with some ominous language. India's growth in January-March was its weakest in nearly a decade, and sparked a new round of economic downgrades from investment banks, with Morgan Stanley cutting India's forecasts for the second time in as many weeks.

Post Your Comments

Share Cancel

Indias weak GDP sparks slew of downgrades
From "gasping elephant" to "stagflation", analysts have panned India's quarterly growth of 5.3% with some ominous language. India's growth in January-March was its weakest in nearly a decade, and sparked a new round of economic downgrades from investment banks, with Morgan Stanley cutting India's forecasts for the second time in as many weeks.

Some analysts also say they now expect a rate cut as early as on June 18, the next Reserve Bank of India meeting.

It will still be a close call though, given the RBI has expressed concerns about continued inflationary pressures and has previously shown reluctance to ease until later in the year.

"There is rising hope for quick monetary policy action supporting the growth outlook, but we believe the current stagflation-type environment will make quick effective reduction of cost capital difficult," Morgan Stanley analysts said in a report.

The U.S. investment bank cut its 2012 economic growth estimates to 5.7% from 6.3%, after already downgrading its forecasts about two weeks ago from an initial estimate of 6.9% growth.

Though Morgan Stanley does not expect a rate cut in June, others say the chances are growing more likely.

Standard Chartered Bank cut its fiscal 2013 GDP forecast to 6.2% from 7.1%, adding a 25 basis point rate cut in June was "now more likely than before."

The bank added that the slowdown in investment demand has spilled over to India's consumption demand, the driving force behind the growth story.

Meanwhile, CLSA said it "will probably" lower its already below consensus GDP forecast of 6.3% to around 6%.

This all but guarantees another few weeks of volatile domestic markets, especially at a time of intensifying worries about the euro zone, signs of a slowing Chinese growth, and continued doubts about the health of the US economy.

The RBI meeting is also scheduled for the Monday after the new elections in Greece on June 17.

In a report titled "gasping elephant," HSBC warned of the challenges ahead, though it did not cut India's forecasts.

"The poor growth number has increased chances of another rate cut, but elevated and sticky inflation limits the scope for aggressive rate cuts and suggest a need for continued caution," HSBC said.

Also read

All eyes on oil firms; will petrol prices be cut?

Q4FY12 GDP growth hits nine-year low of 5.3%: ICRA

Rupee fall to aid exports, support GDP growth: Taimur Baig

RBI doesn't have much room to cut rates: JPMorgan

Political will important for big economic reforms: Maira

Buy, Hold, Sell ? Hear it first on M3
Indias weak GDP sparks slew of downgrades

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login