Kuwait-Mubasher: Emerging markets are going through a rough stage as Brazil is suffering its worst crisis in 80 years, while Russia’s economy is contracting by around 5% compared to 2014 and China continues to decelerate, according to a report by Asiya Investments.
India is the only one country that seems to be able to generate good news as its real GDP growth accelerated from 7.0% to 7.4% year-on-year (y-o-y) in the third quarter of 2015.
In addition, India’s exports also continued to contribute negatively on growth, the domestic sector remained robust, due to a rebound in investment and private consumption resilience.
But the best part is the trend in investment, which went up rapidly in the last three quarters from 2.4% (y-o-y) in the last quarter of 2014 to 6.8% in the three months ending in October this year.
The investment growth is mainly attributed to low oil prices and better business conditions, facilitated by the boost in public capital spending and cheaper credit, according to the central bank.
Inflation has come down from 8% to 5% since early 2014, and that has made possible for the central bank to cut rates four times, reducing the lending rate by 60 basis points so far.
The current account deficit fell from about 7% to 1% of GDP in the last two years, and the fiscal deficit from 5% to 3.4% of GDP since the beginning of 2014.
India’s economic outlook is not without risks as growth will not be sustained unless crucial reforms to reduce red tape and boost investment are implemented.
