S&P cuts India, China GDP growth forecast, U.S. sentiment hit

Discussion in 'China' started by huaxia rox, Oct 12, 2012.

  1. huaxia rox

    huaxia rox Senior Member Senior Member

    Joined:
    Apr 4, 2011
    Messages:
    1,401
    Likes Received:
    103
    S&P cuts India, China GDP growth forecast, U.S. sentiment hit | Real Time News, India

    Global credit rating agency Standard & Poor's has cut its GDP growth estimate for India by 1 percentage point to 5.5% and for China by 0.5 percentage point to 7.5%.

    The cut in India's outlook was prompted by poor monsoon and negative investor sentiment, while in China's case, it was caused by the Central Government's decision not to pump money into the Chinese economy to stimulate growth.

    "The lack of monsoon rains has affected India, for which agriculture still forms a substantial part of the economy. Additionally, the more cautious investor sentiment globally has seen potential investors become more critical of India's policy and infrastructure shortcomings," S&P said in a report on the Asia Pacific today.

    India has one of the worst infrastructure in the world, making the movement of people and goods across the country inefficient and expensive. The Indian government is yet to make big investments in building roads and ports, unlike in China.

    India's infrastructure challenges was recently highlighted by the power outage in early August that affected 20 of India's 28 states, S&P said.

    India has also been grappling with negative investor sentiment after former finance minister Pranab Mukherjee brought in a 'retrospective' law to tax foreign companies for capital gains on their assets in the country.

    S&P, however, expects growth to pick up to 6.5% in 2013 and to 7% in 2014 (see chart above.)

    India used to have growth in the range of 9% before the global recession hit.

    S&P also revised the growth estimates for several other countries in the region. China is now seen growing at 7.5% this year and by 8.2% in the next and in 2014.

    "Our lower forecast for China recognizes that the central government had elected not to inject an economic stimulus of a size and speed necessary for an 8% growth rate. It appears that the approach by the Chinese authorities remains influenced by the unpleasant experience of the inflationary effect, particularly on real estate prices, of the stimulus they initiated in late 2008-2009 to counter the global economic slowdown following the Lehman's collapse," it said.

    As a result of the Chinese slowdown, export-oriented Asian economies of Japan, Korea and Taiwan, and the trading port cities of Hong Kong (in particular) and Singapore will also see slower growth, it said.

    It also revised its sentiment for Europe and the United States downward.

    "In Europe our base case GDP scenario for the Eurozone as a whole is that GDP will decline by 0.6% in 2012 and grow by just 0.4% in 2013, compared with zero and 1% growth, respectively, in our previous base case scenario," it said.

    It now sees a 25% chance for the U.S. economy to slip back into recession
    within the next year--up from 20% in February.

    "Economic activity has downshifted sharply from earlier this year, with hiring and consumer spending growth slowing in the spring. Public sector retrenchment is continuing to drag down growth as well.

    "And while the U.S. housing sector has shown signs of bottoming out, we don't expect home prices to recover strongly soon. At the same time, possible contagion from the European debt crisis, the potential so-called "fiscal cliff" (the collection of expiration of Bush-era tax cuts, payroll tax cut, and other tax relief programs), and the risk of a hard landing for China's economy have added greater uncertainty to U.S. economic prospects in upcoming months," it said.

    It's estimate for U.S. GDP growth is about 2.1% for this year and 1.8% for 2013.
     
  2.  
  3. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

    Joined:
    Nov 28, 2010
    Messages:
    6,207
    Likes Received:
    6,495
    I've said this before, and I am saying it again - these credit rating agencies are the biggest bullshitters around. After all, it is so easy to "revise" the figure ever so often.

    IMF forecasts India's growth at 4.9%, World bank forecasts 6% and S&P forecasts it at 5.5% now. What a lot of nonsense, really.

    If India grows at 6.1% in the first quarter of next year, all three agencies will scramble to "revise" their forecasts.
     
    nrj likes this.
  4. huaxia rox

    huaxia rox Senior Member Senior Member

    Joined:
    Apr 4, 2011
    Messages:
    1,401
    Likes Received:
    103
    these days its surely hard to make predictions......

    and interestingly prcs economy is getting forecasted to embrace its Doom and Gloom for long in this forum pridicted by many of my intellengent indian friends here.....and i cant see any revisions so far......
     
    Tianshan likes this.
  5. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

    Joined:
    May 25, 2009
    Messages:
    10,233
    Likes Received:
    3,896
    Location:
    Holy Hell
    We need an actual govt estimate on growth rate. Only MoF has been consistent with their estimates. But it is fine for external agencies to be 0.5-1% off from actual figures, higher or lower. The calculation depends on a lot of factors. It is no big deal.

    What affects India is the credit ratings given by banks.
     
    thakur_ritesh likes this.
  6. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

    Joined:
    May 25, 2009
    Messages:
    10,233
    Likes Received:
    3,896
    Location:
    Holy Hell
  7. sob

    sob Moderator Moderator

    Joined:
    May 4, 2009
    Messages:
    6,359
    Likes Received:
    3,661
    Location:
    New Delhi
    p2p, some of the data being touted by the Government is pure bomkus. Somebody must have been in Grassland when they compiled the data, or it may be a case of figures being padded.

    There are two points to be noted about these figures,

    1. Figures for 11/12 are finalised almost a year later i.e it will be done around February March 2013, so the data is provisional.

    2. As I wrote above the export data is very fishy. Once last year the Govt. had to write off almost US $ 9 Billion from the figures, but it seems that figure has again come back.

    Interesting article on a research done by a team from Kotak Mahindr on these figures,

    Export golmaal: Now, auto data show funny numbers | Firstpost

     
    p2prada likes this.
  8. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

    Joined:
    Nov 28, 2010
    Messages:
    6,207
    Likes Received:
    6,495
    Here you go, yet another "growth forecast", this time by the UN: Indian economy to grow 5.9%: UN

    UN says 5.9% next year, and 6.5% the year after that.

    These growth forecasts are a real joke.
     
    Raj30 likes this.
  9. Raj30

    Raj30 Senior Member Senior Member

    Joined:
    May 24, 2012
    Messages:
    1,327
    Likes Received:
    1,603
    Usually rating agencies are used to arm twist the government as we have seen in the case of FDI
     
  10. shiphone

    shiphone Senior Member Senior Member

    Joined:
    Nov 9, 2009
    Messages:
    1,472
    Likes Received:
    1,239
    the chart from the latest news about Q3 GDP growth of China ... by Sep 2012
    the last 3 figure (the first 3 quarters of 2012):
    Q1. 8.1
    Q2: 7.6
    Q3: 7.4


    [​IMG]

    the another chart from Indian web about the 2012-12 Q1 GDP growth of india...by June 2012

    [​IMG]

    ------------------------
    the future is uncertain ...but we could talk more about the reality...

    if you call such growth forecast from the rating agency a 'joke'... I thought there was a much big joker there...I do remember those Brave Words from some ranter like ' we will keep growing at the 2 digital rate for next 10 years' bla ...bla ...bla
     
    Last edited: Oct 19, 2012
  11. blank_quest

    blank_quest Senior Member Senior Member

    Joined:
    Aug 4, 2012
    Messages:
    2,128
    Likes Received:
    927
  12. nimo_cn

    nimo_cn Senior Member Senior Member

    Joined:
    Aug 18, 2009
    Messages:
    3,491
    Likes Received:
    592
    Given the massive recession happening around the world, I think both China and India are just doing fine.

    In order to avoid a bigger recession, countries like China and India should collaborate more closely.
     
    J20! and p2prada like this.
  13. DaTang

    DaTang Tihar Jail Banned

    Joined:
    Sep 18, 2012
    Messages:
    482
    Likes Received:
    118
    Hopefully, Indians think the same.
     

Share This Page