News: 'India may survive US economic downturn'
(TNN 09/08/2006) Mumbai - India could be insulated from a possible economic downturn in the United States next year as its trade exposure is evenly spread across the world, Deutsche Bank’s chief economist said on Tuesday.
Norbert Walter, on a trip to India’s financial hub Mumbai, said he expected a downswing in the world economy in ’07 originating in the United States.
“This has to do with the correction in fiscal and monetary policies and burdening high energy costs for countries (with close trade ties) to the US,” he told a news conference. “We can argue that if some of the (domestic) economic policy measures are rejuvenated and gather momentum, India will escape the downturn,” he added.
Walter said outsourcing of IT operations from the United States to Indian firms would not be reversed in the event of a downturn in the US. He said countries with close trade ties to the US such as Malaysia, Taiwan and the Philippines would have a ‘weakening of their cyclical positions.’
But India and China would be able to maintain their current pace of growth because their economies were more internally driven. India’s monetary policy ‘is not yet accommodative, but not restrictive either,’ he said, but the central bank needed to be on high alert if inflation went above 5%.
The Reserve Bank of India raised interest rates by a quarter percentage point to 6% on July 25 to check price pressures in the fast-growing economy. Inflation stood at 4.67% in the 12 months to July 22. The central bank has forecast inflation in the range of 5-5.5% for the fiscal year ending in March ’07. Analysts expect rates to rise further to keep inflation within range and to check year-on-year credit expansion of around 30%.
Norbert Walter, on a trip to India’s financial hub Mumbai, said he expected a downswing in the world economy in ’07 originating in the United States.
“This has to do with the correction in fiscal and monetary policies and burdening high energy costs for countries (with close trade ties) to the US,” he told a news conference. “We can argue that if some of the (domestic) economic policy measures are rejuvenated and gather momentum, India will escape the downturn,” he added.
Walter said outsourcing of IT operations from the United States to Indian firms would not be reversed in the event of a downturn in the US. He said countries with close trade ties to the US such as Malaysia, Taiwan and the Philippines would have a ‘weakening of their cyclical positions.’
But India and China would be able to maintain their current pace of growth because their economies were more internally driven. India’s monetary policy ‘is not yet accommodative, but not restrictive either,’ he said, but the central bank needed to be on high alert if inflation went above 5%.
The Reserve Bank of India raised interest rates by a quarter percentage point to 6% on July 25 to check price pressures in the fast-growing economy. Inflation stood at 4.67% in the 12 months to July 22. The central bank has forecast inflation in the range of 5-5.5% for the fiscal year ending in March ’07. Analysts expect rates to rise further to keep inflation within range and to check year-on-year credit expansion of around 30%.
posted by InCar Group Press Room at 19:41
0 Comments:
Post a Comment
<< Home