Economic recovery remains lackluster...
Real GDP growth improved to 2.4% (Q3'18: 1.8%), sustaining its quarterly climb from Q2'18. The marginal improvement in GDP continues to be driven wholly by expansion in non-oil sector activities, which grew further to 2.7%. This time around, the agriculture sector also contributed to the sustained improvement in the sector, even as the services sector continues to undergird non-oil growth.
However, when compared with the corresponding quarter in 2017 (Q4'17: 2.1%), GDP growth was marginal. This indicates that the country's economic recovery remains flat and below expectations.
Read our detailed analysis of Nigeria's Q4'18 GDP figures and other economic projections in our latest Nigeria Economic Alert.
Economic recovery remains lackluster...
Real GDP growth improved to 2.4% (Q3'18: 1.8%), sustaining its quarterly climb from Q2'18. The marginal improvement in GDP continues to be driven wholly by expansion in non-oil sector activities, which grew further to 2.7%. This time around, the agriculture sector also contributed to the sustained improvement in the sector, even as the services sector continues to undergird non-oil growth.
However, when compared with the corresponding quarter in 2017 (Q4'17: 2.1%), GDP growth was marginal. This indicates that the country's economic recovery remains flat and below expectations.
Read our detailed analysis of Nigeria's Q4'18 GDP figures and other economic projections in our latest Nigeria Economic Alert.
Why the benefit of reduction in Crude oil prices has not been transferred to public? What are dynamics behind not reducing the Petrol and Diesel price significantly?
Affect of Money supply on inflation and GDP.................how our GDP and inflation vary with our Indian economy going up or down...................know thru did prez.........
From the Desk of the CEO.
The heat is on. While many of us have been vacationing in cooler climes, the Sensex has kept itself rather busy, gaining another 4% during the month of May. The upmove has come largely on the back of better-than-expected corporate results and expectations of a good monsoon. Markets are also taking cognisance of various indicators like improved auto sales, higher steel and cement offtake, public infrastructure spending, etc. which are positive signs of an imminent economic recovery.
Crude prices have silently crept up and are currently hovering at the $50 level, almost double from the January lows. So despite the adverse implications of higher crude prices on the Indian economy, there seems to be some positive correlation between crude prices and the equity markets. Though this pattern may not have always played out in the last few decades, the first few months of 2016 certainly seem to indicate so. The main reason for this is the significantly high weightage that the Energy sector has in indices the world over. When oil plummeted to sub-$30 levels, it seriously impacted the profitability of some of the world’s biggest corporations, not only causing their stock prices to fall sharply, but also impacting the broader markets in general. It also indicated a global recessionary trend, thus affecting investor sentiment and causing them to become nervous and risk-averse. The bounce back in crude has brought the price to a level that makes it profitable for companies to drill, creating a sense of well-being for both, the Energy sector as well as the countries whose economies are dependent solely on oil. Where crude prices go from here remains to be seen.
After several quarters of benign inflation, the WPI rose to 0.34% while retail inflation soared to 5.39% in April 2016. This, coupled with higher oil prices would make it difficult for Governor Rajan to announce a rate cut at the next RBI policy meeting on 7th June. Across the globe however, Janet Yellen’s comments on improving economic data in the US has the markets believing that a rate hike by the US Federal Reserve is a high possibility during its next meeting in mid-June. The outcome of Britain’s referendum on Brexit is also an event that we will be closely watching.
With markets factoring in all the good news for now, conventional logic says that short term investors need to be cautious. But when the stock market catches momentum, all negative predictions may be proven wrong.
There are of course, many more bulls than bears when it comes to a 1 year plus view. Long term investors may continue their investments and look to buy into any dips.
Wish all of you a happy monsoon season.
Interbank call money rates remained mostly below the RBI‟s repo rate of 4% in May owing to comfortable liquidity in the system. However, some pressure was seen on the rates following intermittent spike in demand for funds from banks.
Currency in circulation rose 18.4% on-year in the week ended May 22, 2020, compared with 14.2% growth a year ago. The RBI, via its liquidity window, absorbed Rs 5114.71 billion on a net daily average basis in May 2020, compared with net liquidity absorption of Rs 4751.55 billion in April 2020.
Bank credit growth rose 6.5% on-year in the fortnight ended May 8, 2020, compared with 7.2% on-year growth reported in the fortnight ended April 10, 2020.
Why the benefit of reduction in Crude oil prices has not been transferred to public? What are dynamics behind not reducing the Petrol and Diesel price significantly?
Affect of Money supply on inflation and GDP.................how our GDP and inflation vary with our Indian economy going up or down...................know thru did prez.........
From the Desk of the CEO.
The heat is on. While many of us have been vacationing in cooler climes, the Sensex has kept itself rather busy, gaining another 4% during the month of May. The upmove has come largely on the back of better-than-expected corporate results and expectations of a good monsoon. Markets are also taking cognisance of various indicators like improved auto sales, higher steel and cement offtake, public infrastructure spending, etc. which are positive signs of an imminent economic recovery.
Crude prices have silently crept up and are currently hovering at the $50 level, almost double from the January lows. So despite the adverse implications of higher crude prices on the Indian economy, there seems to be some positive correlation between crude prices and the equity markets. Though this pattern may not have always played out in the last few decades, the first few months of 2016 certainly seem to indicate so. The main reason for this is the significantly high weightage that the Energy sector has in indices the world over. When oil plummeted to sub-$30 levels, it seriously impacted the profitability of some of the world’s biggest corporations, not only causing their stock prices to fall sharply, but also impacting the broader markets in general. It also indicated a global recessionary trend, thus affecting investor sentiment and causing them to become nervous and risk-averse. The bounce back in crude has brought the price to a level that makes it profitable for companies to drill, creating a sense of well-being for both, the Energy sector as well as the countries whose economies are dependent solely on oil. Where crude prices go from here remains to be seen.
After several quarters of benign inflation, the WPI rose to 0.34% while retail inflation soared to 5.39% in April 2016. This, coupled with higher oil prices would make it difficult for Governor Rajan to announce a rate cut at the next RBI policy meeting on 7th June. Across the globe however, Janet Yellen’s comments on improving economic data in the US has the markets believing that a rate hike by the US Federal Reserve is a high possibility during its next meeting in mid-June. The outcome of Britain’s referendum on Brexit is also an event that we will be closely watching.
With markets factoring in all the good news for now, conventional logic says that short term investors need to be cautious. But when the stock market catches momentum, all negative predictions may be proven wrong.
There are of course, many more bulls than bears when it comes to a 1 year plus view. Long term investors may continue their investments and look to buy into any dips.
Wish all of you a happy monsoon season.
Interbank call money rates remained mostly below the RBI‟s repo rate of 4% in May owing to comfortable liquidity in the system. However, some pressure was seen on the rates following intermittent spike in demand for funds from banks.
Currency in circulation rose 18.4% on-year in the week ended May 22, 2020, compared with 14.2% growth a year ago. The RBI, via its liquidity window, absorbed Rs 5114.71 billion on a net daily average basis in May 2020, compared with net liquidity absorption of Rs 4751.55 billion in April 2020.
Bank credit growth rose 6.5% on-year in the fortnight ended May 8, 2020, compared with 7.2% on-year growth reported in the fortnight ended April 10, 2020.
2. Causes for Inflation
Cost-Push and Demand Pull inflation –
because of increase in prices of oil and
food grains
Excess liquidity in Money markets
Foreign investments
Government Spending
The base effect
6. RBI and GOI measures
Measures taken to absorb liquidity – monetary policy
Raised Cash Reserve Ratio
Increase in short-term borrowing & lending rates of RBI
Reduced import duties
Ban on things that could be exported.
7. Comments
Raising interest rates and CRR will absorb
liquidity – right decision
Similar efforts in the past have proven effective
Long term Solution :
Supply Side increases in Gas to reduce reliance on
Imported Oil
Another ‘Green Revolution’ reducing dependence
on Monsoons and better Storage facilities
