'Worst is over for the Indian economy'
Sunday, 8 January 2012
SINGAPORE, Jan 7 (Business Standard): The worst could be over for the Indian economy, Swiss bank Credit Suisse said, after contending with many months of stubbornly high inflation and sluggish growth.
Robert Prior-Wandesforde, Credit Suisse's Head of Economics for South East Asia and India, said at the bank's 2012 Macro Conference here on Friday: "The way I saw India in 2011 was that everything that could have gone wrong did go wrong. Growth surprised on the downside; we were at the bottom of the consensus but it was even lower than we anticipated. Inflation failed to come down for the majority of the year and remained high and sticky, and as a result of that interest rates rose far more than anybody anticipated."
But alongside the "remarkable" drop in India's food inflation numbers recently - down to (-) 3.36 per cent during the week ended December 24 from 0.42 per cent in the previous week - Prior-Wandesforde noted that the softening of global commodity prices could also help bring down the country's Wholesale Price Index (WPI) to below 6 per cent in this calendar year.
"We are in a situation where growth is still poor and will remain poor for much, if not most, of 2012. But inflation is coming down, and meaningfully so. And that drives lower interest rates. If you think of those three key macro drivers, whereas all three was negative in 2011, two of those three will be positive in 2012; and, I think will deliver much better equity market performance in 2012," he said.
Robert Prior-Wandesforde, Credit Suisse's Head of Economics for South East Asia and India, said at the bank's 2012 Macro Conference here on Friday: "The way I saw India in 2011 was that everything that could have gone wrong did go wrong. Growth surprised on the downside; we were at the bottom of the consensus but it was even lower than we anticipated. Inflation failed to come down for the majority of the year and remained high and sticky, and as a result of that interest rates rose far more than anybody anticipated."
But alongside the "remarkable" drop in India's food inflation numbers recently - down to (-) 3.36 per cent during the week ended December 24 from 0.42 per cent in the previous week - Prior-Wandesforde noted that the softening of global commodity prices could also help bring down the country's Wholesale Price Index (WPI) to below 6 per cent in this calendar year.
"We are in a situation where growth is still poor and will remain poor for much, if not most, of 2012. But inflation is coming down, and meaningfully so. And that drives lower interest rates. If you think of those three key macro drivers, whereas all three was negative in 2011, two of those three will be positive in 2012; and, I think will deliver much better equity market performance in 2012," he said.