Economy growth to cool down: MS

By agencies   |   Friday, 25 November 2005, 08:00 Hrs
Printer Print Email Email
MUMBAI: IndiaÂ’s economic growth could slow down in the near future aided by factors like drying liquidity, hike in the interest rate and the resultant slump in consumption, JM Morgan Stanley said in its November report.

"We believe that Fed rates and concerns on potential inflationary pressure, credit failure risks and asset bubbles will ensure a continued tightening in monetary policy over the next 12 months. This, we believe, will weigh on domestic consumption growth. The good news is that the investment cycle will improve supporting growth, but some pull back is inevitable in the near term," the report said.

The report said India has been living on debt more than any other non-Japan Asian country or even the U.S. This is reflected in the growth in consumer goods segment of industrial production that recorded a ten-year high during the 2004-05 period.

A steep hike in debt as a percent of GDP is supposed to have shot up consumptions and in turn, the growth. But with the central bank making money dearer, consumption levels are expected to fall, the report said.

On the other hand, one of the major concerns is the slower than expected growth in investments. Though announced and proposed capital expenditure (Capex) as a percentage of GDP has shot up sharply, Capex under implementation is barely growing at the nominal GDP growth rate, the report said.

Fossil Group sells smartwatch
Global watch and accessories maker Fossil Group has announced to sell its smartphone technolog..
Ola raises Rs 400 cr for electric
Leading ride-hailing cab aggregator Ola on Friday said it raised Rs 400 crore from its early in..
SpiceJet plans aggressive
Budget passenger carrier SpiceJet plans to aggressively expand its international networks to fl..
GST rate cut to spur Bengaluru
The realty market in India's tech hub is set to grow as lower Goods and Services Tax (GST) rate..