ARE THE BRICs RUNNING OUT OF STEAM? INDIAN ECONOMY POSTS DISMAL GROWTH

 

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A lot of talk lately has been devoted to the subject of the BRICs failed promise of economic boom.  Even though China is still steady in its growth, countries like Brasil and India are failing to show the kind of numbers that indicate sustained growth.

The last economic data point to a dismal 0.6 percent in February, and this data only adds to a number of other figures that show a weakening of the economy and some say a need for quick intervention in the form of lowered interest rates and increased liquidity.

Output at factories, mines and utilities did better than expected, as a contraction was forecast of almost 1.0%, but it still dropped significantly from the 2.4 % gain shown in January.  

India then, still has significant steps it needs to take if it wants to emerge from the economic woes that are slowing her down.  

Expectations have all but dropped when it comes to growth.  Manufacturing, which was the roaring tiger of the Indian promise only grew 2.2 % in February, but some durable goods output fell more than 2.7 percent. 

 Car sales, another critical indicator of economic growth, fell for the first time in a decade.  

One positive note was the data from the industrial machine sales, which rose a very positive 9.5 percent, a noticeable uptick from January's 1.7%.

In total the economy is forecast to grow about 6% this year, starting in April, after last's year 5%, which was considered the lowest rate in a decade.

One of the factors leading to the slow down, many believe, are the high interest rates consequent the stubborn inflation, coupled with lower exports.  Investment in the country is also lagging, due to the low confidence of foreign investors amidst the corruption scandals that continue to plague the country..  

Two of the recommendations by experts is to open foreign investment by streamlining the process and planning infrastructure bonification, which could offer jobs and boost construction.     

Without getting a handle on inflation though, it will be nearly impossible for the central banking authorities to lower interest rates to bolster the economy.  Inflation in February was still stubbornly clinging to the double digit mark at 10.39%.

Source: France 24/  4.14.13