China still has some ammunition to provide support to growth. The recent inflation reading from China remained quite subdued
For the full year, Eskesen expects the CAD to remain below or closer to 2 percent.
Leif Eskesen, Chief Economist for India & Asean, HSBC Global Research says third quarter GDP growth is in line with expectation. On the demand side, weakness still resides when in comes to private consumption and investment. He says, Indian recovery has to be investment-led for it to be sustainable.
Leif Eskesen, Chief Economist -India & ASEAN at HSBC says even the government's own underlying assumptions for nominal gross domestic product (GDP) growth is quite low - around 11-12 percent, while the nominal tax revenue growth expectations are buoyant, which will make it difficult to achieve some of the revenue targets.
Leif Eskesen believes growth is likely to decelerate in the second half of the fiscal and the Q2 fiscal numbers for the financial services sector may also come in lower for the second half.
The HSBC India Composite Output Index, which maps both services and manufacturing, stood at 49.6 in January, below the crucial 50 mark, for the seventh consecutive month.
According to Leif Eskesen of HSBC RBI should tighten monetary policy into this year because inflation is too high and there is a need for a more decisive monetary policy response, if inflation has to be controlled.
Leif Eskesen, Chief Economist, India & ASEAN, HSBC Global Research, spoke with CNBC-TV18, to discuss the results of the HSBC Purchasing Managers' Index.
According to Leif Eskesen, market has already factored in the 25 bps repo rate hike and would be surprised if RBI either does not take any action or tightens the monetary policy aggressively.
Leif Eskesen, HSBC Global Research says both WPI and CPI will be broadly in line with the previous months - above 10 percent for CPI, still above 7 percent for WPI
According to the global brokerage firm, the deficit is likely to widen again as imports get a lift from seasonal demand and a gradual recovery in domestic demand.
The growth story in Southeast Asia appears "less shiny and glossy in bright daylight" since talk of Fed tapering began, said Leif Eskesen, HSBC`s chief economist for Asean, or the Association of South East Asian Nations, in a note.
Gross domestic product (GDP) numbers that came out yesterday from the US were a bit stronger than expected although if you look at the details of the US data it was not that strong. But markets took the cue that maybe the Fed will start tapering a bit sooner than expected.
While data on Thursday showed euro zone inflation fell to a four-year low of 0.7 percent on year in October, it may not offer much support for the view QE is damping inflation.
Another grim Purchasing Managers' Index (PMI) suggests the slowdown in Asia's third-largest economy is becoming entrenched despite some mark up in overseas demand which prompted firms to hire more workers.
HSBC's Leif Eskesen believes the Reserve Bank of India may raise interest rates further to deal inflationary pressures. The apex bank on Tuesday raised the repo rate by 25 bps to 7.75 percent and reduced the MSF by 25 bps to 8.75 percent.
In an interview to CNBC-TV18, Leif Eskesen, HSBC Global Research says that the poor PMI data was on the back of high macro uncertainty. However, he expects the CAD to narrow going forward.
Leif Eskesen of HSBC Global Research believes the central bank did a balancing act by slightly rolling back the liquidity tightening measures and giving an indication that they can be turned either way if required to balance the currency.
The chief economist (India & Asean) at HSBC, Lei Eskesen, sees agriculture sector reaping benefits of good harvest after an impressive monsoon. But the chief economist of HSBC suggested that most other sectors will disappoint in Q1.
According to Leif Eskesen of HSBC, the Indian rupee may be looking at 61.5 against the dollar by the end of this fiscal year. It can further go down to 63 by the end of FY15, thus indicating a gradual depreciation of the currency.
Leif Eskesen maintains his FY14 GDP growth target for India at 5.5 percent, but cautions that if there is no recovery in manufacturing and service sector then this estimate may fall further.
There is not much room for the RBI to ease policies in the near-term. If some of the pressures on the currency were to dissipate and if inflationary pressures ease a bit, then there might be a rate cut in September or October.
The growth conditions in India continue to remain weak. Leif Eskesen of HSBC Global Research sees India‘ GDP at 4.8 percent in the current quarter. He added that it will take some more time for the India economy to start recovering.
Leif Eskesen of HSBC believes lack of implementation of reforms and lingering global weakness led to a cut in the growth forecast to 5.5 percent for FY14
Leif Eskesen, Chief Economist - India & ASEAN for HSBC spoke to CNBC-TV18's Udayan Mukherjee about his views on the IIP number.