Economy Analysis Ritesh Arun Priyanka

7/31/2019 Economy Analysis Ritesh Arun Priyanka

1/20

ECONOMY ANALYSIS

Prepared by:

Priyanka

Arun

Ritesh


2/20

AGENDA

1. WORLD ECONOMY WATCH

2. INDIAN ECONOMY


3/20

WORLD ECONOMY

World GDP expected to

decline by 0.5%

World GDP growth rate

projected on a low tide by

IMF.

Advanced economies growth

affected most by the global

slowdown.

Emerging economies had alesser impact.

World GDP rate

-4-202468

10

2005 2006 2007 2008 2009 2010

%

Advanced economies Emerging economies

World economies


4/20

WORLD ECONOMY

Global growth projections for 2009 have been marked down to

3% by IMF.

Root cause for the quick decelerating growth rate is The US sub-

prime crisis.

Financial markets remain under stress.

Financial crisis pushes the advanced economics into recession.

Emerging economics have to a great extent remained silent to

the global financial turmoil.


5/20

2. INDIAN ECONOMY

A. GDP,IIP, & External Trade.

B. Inflation & Interest rates.

C. Fiscal Policy.


6/20

A. GDP,IIP, & External Trade

GDP growth rate goes down for

Q3 2008-09.

Agriculture sector on a downturn.

Manufacturing and constructionindustries decelerating.

Service sector playing safe. Industrial growth turned negative

for the second time in the first

nine months of the current fiscal.

Sectorial divison of GDP

55%

18%

27%

Service Agriculture Industry


7/20

Indian GDP declines after a steady growth

GDP declined to 5.3% inOND08.

Agriculture sector had the major

decline of -2.2% in OND08.

Industry sector registered at 2.4%in OND08 which was much

lower than JAS08 which was

6.1%.

Service sector grew at 10.7%.

Gradual decline in the GDP growth rate

0

2

4

6

8

10

JFM07

AMJ07

JAS07

OND07

JFM08

AMJ08

JAS08

OND08

%

GDP growth rate

Sector wise divison

-4

0

4

8

12

Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2006/07 2007/08 2008/09

%

Agriculture,Forestry&Fishing Industry Service


8/20

IIP goes on the negative side

Manufacturing sector thehaving the major part fell by

1.5%.

Capital goods sector growth

rate drastically slowed down to

3.1% in October over the

20.9% a year ago.

IIP growth in %

-2

0

2

4

6

8

10

Jan

08-0

9

Feb

08-0

9

Mar

08-0

9

Apr

08-0

9

May

08-0

9

Jun

08-0

9

Jul08-0

9

Aug

08-0

9

Sep

08-0

9

Oct

08-0

9

Nov

08-0

9

Dec

08-0

9

Jan

09-1

0

%

IIP growth in %

MONTHLY GROWTH RATE IIP C OMPONENTS

-2

2

6

10

Dec-

07

Fe

b-0

8

Apr-

08

Jun-0

8

Aug-

08

Oc

t-08

dec,0

8

9-Fe

b

%

Mining Growth % Manufacturing Growth %

Electricity Growth %


9/20

Manufacturing hits bad-Decline in capital goods

Slowing output in the

consumer durables.

Steep increase in the lending

rates.

Spiraling inflation increases

raw material rates.

IIP divison

-10

-505

10152025

Apr May Jun Jul Aug Sep Oct Nov Dec

%

Basic goods Capital goods intermediate goods


10/20

Global slowdown slows Exports of India

Exportsdeclining at a

constant level from Aug 08.

Contribution of Petroleum

highest at 30.9%. Exports of India

30.90%

9%

8.80%7.50%

4.10%

39.00%

Petroleum Electornic goods Gold

Machinery Gem & Jewellery Other goods

Monthly export & import

5000

10000

15000

20000

25000

30000

35000

Oct

,07

Nov,07

Dec

,07

Jan,08

Feb,

08

Mar

,08

Apr,08

May

,08

June

,08

July

,08

Aug,08

Sep,08

Oct

,08

Nov,08

Dec

,08

Jan,09

Feb,

09

$ mn

Export

Import


11/20

FDI

Policy rationalization and

liberalization measures taken

by the Government have

resulted in increased inflows

of FDI.

Major contributor : Service

sector, telecom and

construction industry.

% of Total Inflows

22%

11%

8%

6%6%

47%

Service ComputerSoftware&HardwareTelecommunication Housing&RealestateC onstruction Activities Others

#other:Automobile,Pow er,

Metallurgical,Petroleum,Cehmic

Amount of FDI inflows (In US$ million)

010,00020,00030,00040,00050,00060,00070,00080,000

2002-

2003

2003-

2004

2004-

2005

2005-

2006

2006-

2007

2007-

2008

2008-

2009

(US$mn

)Amount of FDI


12/20

B. INFLATION & INTEREST RATES


13/20

Fall in oil price leads to fall in inflation

Fall in crude price.

Wholesale prices are rising at

their slowest pace.

Monthly Oil Baskt Price

20

60

100

140

Apr-0

8

May-0

8

Jun-0

8

Jul-0

8

Aug-0

8

Sep-0

8

Oct-0

8

Nov-0

8

Dec-0

8

Jan-0

9

Fe

b-0

9

Mar-0

9

Apr-0

9

US$/b


14/20

Driver of the economy bus

Banks are making new plans

to up bring the economy.

Lowering the lending rates.

Total bank finace to Industry

2100000

2200000

2300000

2400000

2500000

2600000

2700000

Apr

May Ju

n Jul Aug

Sep

Oct

Nov

Dec Ja

nFeb

Rs

incr.

Rs in cr


15/20

CONTROLS BY RBI

To infuse liquidity banks

reduced the lending rates.

RBI cuts down CRR & Repo

rates.

RBI to buy-back the MSS

issued.

Decline in CRR

2

4

6

8

10

12

14

Jan-0

8

Fe

b-0

8

Mar-

08

Apr-

08

May-0

8

Jun-0

8

Jul-08

Aug-0

8

Sep-0

8

Oc

t-08

Nov-0

8

Dec-0

8

Jan-0

9

Fe

b-0

9

Mar-

09

Apr-

09

%

CRR %

Monthly Rates

0

10

20

30

40

50

Apr-

08

May-0

8

Jun-0

8

Jul-08

Aug-0

8

Sep-0

8

Oc

t-08

Nov-0

8

Dec-0

8

Jan-0

9

Fe

b-0

9

Mar-

09

Apr-

09

%

CBLO Call Repo

Trend of Bond issued by RBI uder

MSS

0

40000

80000

120000160000

200000

Jan.0

8

Feb.0

8

Mar.0

8

April.0

8

May.0

8

Jun.0

8

July.0

8

Aug.0

8

Sep.0

8

Oct.08

Nov.0

8

Dec.2

008

Rs.in(c

r)


16/20

C. FISCAL POLICY


17/20

Increase in Deficit

There is an increase in

Deficit since October 2008.

Government aims to reducethe deficit without affecting

the growth of India.Growth of M Cap to GDP

10.0015.00

20.0025.00

AMJ07

JAS07

OND07

JFM

08

AMJ08

JAS08

OND08

M Cap/GDP

Increase in Deficit

-150000

-50000

50000

150000

250000

350000

Feb-08

Mar-08

Apr-08

M

ay-08

Jun-08

Jul-08

A

ug-08

S

ep-08

Oct-08

N

ov-08

D

ec-08

Jan-09

Feb-09

INR

Cr

Revenue Deficit Fiscal Deficit Primary deicit


18/20

BCI & PCI

Q3-Q4 shows BCI at -5.6% as per the report by RBI.

Global economic outlook, high cost of funds and credit crunch

could be the reasons for future decline of BCI.

An increase in PCI by 24% is expected from the Government.


19/20

OUTLOOK

Though India has been less effected by the world global slow

down but the future of India has to be remain on the front foot.

India should explore more industrial opportunities.


20/20

THANK YOU.

Economy Analysis Ritesh Arun Priyanka

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