US economy slid at 6.1% in first quarter

(29/4/2009 - US Economy Updates) - The US economy contracted at a 6.1 percent annual pace in the first quarter of 2009, the government said Wednesday, signaling little improvement in a deep recession.

The Commerce Department's first estimate of gross domestic product (GDP) was a disappointment to forecasters expecting a 4.7 percent decline, and marked only a marginal improvement over the 6.3 percent drop in the fourth quarter of 2008.

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The decline marked the third consecutive quarter of contraction for the world's biggest economy, which had not occurred since 1974-1975.

The steep fall was the result of falling exports, declines in business and household investment and a weak housing market, offset in part by improved consumer spending.

Consumer spending rebounded in the quarter, growing 2.2 percent after falling 4.3 percent in the last quarter of 2008.

But even though consumer activity makes up the lion's share of activity, it was not enough to offset hefty declines in other segments of the economy.

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Investment in housing or residential structures fell 38 percent and spending on nonresidential business investment slumped 37.9 percent including a 33.8 percent drop in software and equipment.

Exports tumbled 30 percent and even government investment fell 4.0 percent.

posted under - US economy, economy of US, economic updates, US economic updates

Indian economy to recover from mid-2009 - Macquaire

(29-4-2009 Indian economy updates) - Indian economy will begin to recover from the middle of this year, thanks to the fiscal and monetary measures taken up by the government, but the outcome of the ongoing general election remains a legitimate concern, global research firm Macquarie has said.

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Macquarie said, "Our view remains that the largely domestically-driven Indian economy will begin to recover palpably from mid-year onwards."

The double-cylinder fiscal and monetary response has been aggressive and already paying dividend, the research firm said but added that "political uncertainty over the outcome for the ongoing general election remains a legitimate concern".

The other factors likely to contribute include that India is relatively less dependent on exports, its export profile is not heavily dependent on electronic or automotive shipments and the domestic fiscal and policy response has been aggressive and effective.

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Macquarie further said the Reserve Bank of India appears to be approaching the end of the policy rate-cutting cycle, but banks have more room to cut their lending rates more aggressively, which in turn should boost economic activity.

"Indeed, the broader setting is evolving nicely to position the economy for a better second-half of FY'10. Currently, we forecast a full-year GDP growth of 5.5 per cent for FY'10 following an estimated 6.5 per cent in the last fiscal year," Macquarie said.

posted under - economy of india, indian economy updates, economic crises, india economy, indian economy blog

RBI extends concessional credit to exporters till Oct 31

(28/4/2009 - RBI news) - Providing relief to exporters hit by shrinking global demand, the Reserve Bank on Tuesday extended the concessional interest rate scheme by six months till October this year.

The ceiling of interest rate on pre-shipment rupee export credit up to 270 days and post-shipment credit up to 180 days at BPLR minus 2.5 per cent was to expire on April 30, 2009.

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"It has been decided to extend the validity ... up to October 31, 2009," the RBI said in a circular to the scheduled commercial banks.

Since these are ceiling rates, banks would not be able to charge exporters interest rates above the benchmark prime lending rate (BPLR) minus 2.5 per cent.

The Federation of Indian Export Organisations has been demanding that exporters should be given credit at 7 per cent without linking with the prime lending rate.

The exporters has been hit by recession in major markets of the US, Europe and the Middle East, which together accounts to over 70 per cent of India's overseas sales.

posted under - RBI updates, reserve bank of india, RBI news, exporters credit

Direct tax collection Rs 3.37 lakh crore

(27/4/2009 - Indian Direct tax updates) - The direct tax collection during the last fiscal year 2008-09 was to the tune of Rs 3.37 lakh crore against Rs 3.12 lakh crore in financial year of 2007-08, a top revenue official said on Monday.

"The tax collection was, however, short of budgetary estimates of Rs.3.45 lakh crore. Similarly, the indirect tax collection was Rs 2.65 lakh crore as against Rs 2.81 lakh crore in previous year, Secretary, Department of Revenue, New Delhi, P V Bhide told reporters.

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Bhide, who was here to attend the passing out of 61st batch of Indian Revenue Service (IRS) at the National Academy of Direct Taxes (NADT), said the cut in duty taxes reduced the indirect tax collection.

Speaking at the valedictory function of induction course of 61st batch, Bhide called upon the young officers to be honest and strive for tax administration while their primary responsiblity is tax collection.

Treat the income tax assessee as a client and not a criminal, he advised. The new tax code was being readied and would be brought in soon, he said.

posted under - Direct tax, direct taxes updates, pay direct tax, indian economy updates, direct taxes 2008-09, tax updates 2008-09

Japanese economy to shrink 3.3 per in 2009 - Japan Govt

(Japanese economy updates) - Japan's economy is likely to shrink 3.3 percent this fiscal year, its worst contraction since World War II, the Cabinet announced Monday as it submitted a massive supplementary budget to finance a new stimulus package.

Exports and production are falling drastically, while employment conditions are rapidly worsening. Financing for businesses is also severe, and it is correct to say that Japan is in the middle of a financial crisis, Finance Minister Kaoru Yosano said in an address to the parliament.

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Yosano asked lawmakers to quickly pass the extra budget, which calls for a record 15 trillion yen ($155 billion) in government spending to finance a new stimulus package. The package is equivalent to about 3 percent of Japan's gross domestic product.

His remarks came after the Cabinet downgraded its forecast for Japan's GDP to a contraction of 3.3 percent for the current fiscal year through March 2010. It had previously predicted GDP would be flat for the period.

It also said the world's second-largest economy is likely to have shrunk 3.1 percent in the fiscal year that ended last month, worse than the previous estimate of a 0.8 percent contraction.

With the latest estimates, Tokyo now expects the two-year period to be the worst for the economy in the country's postwar history. The largest previous GDP contraction was 1.5 percent in 1998.

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In a statement released early Monday, the Cabinet said the stagnant global economy was hurting Japan's mainstay exports. But it said its economic measures would prevent Japan from getting caught in a downward spiral.

The Finance Ministry last week said Japan recorded its first annual trade deficit in 28 years in the just-ended fiscal year.

Japan has heavily relied on foreign sales of its cars and gadgets to drive economic growth, and is reeling from the collapse in global demand sparked last year by the U.S. financial crisis. Its economy shrank an alarming annual 12.1 percent in the October-December quarter, marking the steepest contraction since the oil shock of 1974.

The administration says the newest stimulus package will help protect the economy from slipping further while laying the foundation for future growth. It also provides support for the unemployed and small businesses.

The spending will also add to Japan's expanding public debt. Since Prime Minister Taro Aso took office in September, lawmakers have already approved two stimulus packages worth 12 trillion yen in fiscal spending.

posted under - Japan economy, economy of japan, japanese economy updates, japan recession, recession in japan, japanese economy
source - www.economictimes.com

Indian Inc's overseas investment slips 11 percent - RBI

(23/4 Indian Economy updates -the slowdown effect) - Facing the pangs of slowdown, India Inc appears to have restrained from overseas mergers and acquisitions as the country's foreign investment slipped by over 11 per cent during April-December 2008, says Reserve Bank.

"During the first nine months of 2008-09, 2,828 proposals amounting to $16,352 million were cleared for investments abroad in JVs (joint ventures) and WOSs (wholly owned subsidiaries), as against 1,595 proposals amounting to $18,437 million during the corresponding period of the previous year," the central bank said in its April Bulletin.

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Even though the number of proposals recorded an increase of 77.3 per cent, amount invested by India Inc on overseas ventures dipped by over 11 per cent during the period.

There were a total of 2,828 proposals during the first nine months of 2008-09 against 1,595 proposals in the corresponding period previous year.

"During the quarter, October-December 2008, proposals amounting to $7,409 million were cleared for investments abroad in JVs and WOSs, as against $7,882 million during October-December 2007, the RBI said.

posted under - RBI updates, economic updates, economy of india, indian economy slowdown, slowing economy, asian economies, indian rupee, economy of india

Inflation rises to 0.26 percent - April 11

Indian inflation Updates April 2009 - Annual Inflation consisting Wholesale price index rose 0.26 per cent in the 12 months to April 11, above the previous week's annual rise of 0.18 per cent.

It was above a median forecast of 0.09 per cent in a poll of analysts. The annual inflation rate was 7.95 per cent during the corresponding week of the previous year.

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The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is released weekly.

Hmm so despite slowdown everywhere indian economy is showing growth signs as growth in inflation percent nearly shows that consumer spending has not been hit amid global economic crises , One reason for growth of indian economy is (according to me) is the black economy which runs in parallel in india but is not shown in the audit books of the firms, so atleast some advantage of black money in these crucial crises times.....

wait for the next post dedicated to "parallel black economy of india"

posted under - inflation 2009, indian inflation, inflation in april, april inflation updates, economy of india, indian economy updates

Indian Forex reserves at USD 252 billion

(20/4/2009 Indian Economy updates) - India's foreign exchange reserves stood at USD 252 billion as of end-March, declining by USD 57.7 billion over the previous year, the Reserve Bank said on Monday.

The RBI said in its Macroeconomic and Monetary Developments in 2008-09 said, the overall approach to the management of India's foreign exchange reserves in recent years reflects the changing composition of the balance of payments and the 'liquidity risks' associated with different types of flows and other requirements.

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"Taking these factors into account, India's foreign exchange reserves continued to be at a level consistent with the rate of growth, the size of the external sector in the economy and the size of risk-adjusted capital flows," RBI said.

posted under - economy of india, indian economy updates, indian forex reserves, RBI updates, indian economy blog, economy of india updates, forex updates, india forex reserves

Economic growth drivers moderating - RBI

Major drivers of growth in India are witnessing moderation and various surveys of economic activity point towards less-than-optimistic
sentiment for the economy in coming months, the Reserve Bank of India (RBI) said on Monday.

The survey of professional forecasters conducted by the Reserve Bank of India cut gross domestic product estimates for the 2009/10 fiscal year to 5.7 percent from 6.0 percent, it said in a review of the economy.

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The central bank said the slew of measures taken by it and the government would help tame the moderation in growth and revive consumption and investment demand.

Inflation lowers but food items prices skyrocket

Annual inflation fell to a three- decade low of 0.26 per cent, although prices of essential food items rose by up to 17 per cent, shows data released just days ahead of the country going to general elections.

Wholesale prices-based inflation declined by 0.05 percentage points for the week ended March 28 from 0.31 per cent in the previous week.

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Even as the point-to-point inflation is near zero level, the average rate of price rise works out to be 8.4 per cent for the fiscal 2008-09 against 4.7 per cent in 2007-08.

Edible items like salt, sugar, milk, cereals, pulses, manufactured food products, spices and fruits were selling at higher rates for the week under review than a year ago.

In the backdrop of fall in sugarcane production, sugar prices soared by 17 per cent leaving a bitter taste. Inflation has become a key election issue, with political parties promising cheap rations for the poor.

Salt prices too went up by 10.68 per cent, milk by 6.22 per cent, cereals by 9.61 per cent, pulses 8.46 per cent and fruits by 8.02 per cent. However, drop in prices of minerals, metals, fuel, power and lubricants helped pull down the over all inflation to a three decade low.

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With the inflation dropping to such a low, analysts feel that the Reserve Bank of India may signal further cut in interest rates. RBI Governor D Subbarao reviewed the interest rate scenario with the heads of commercial banks in Mumbai yesterday.

"Inflation is low due to crisis in demand and crisis of confidence. It is low (also) due to base effect," said economic research body, RIS' Director-General Nagesh Kumar.

The Finance Ministry described the year-on-year price rise as "stable". It said the inflation of primary articles declined for the week ended March 28, 2009 from the previous week.

However, there was 3.46 per cent point-to-point annualised price rise for these articles. Further disaggregation of food articles shows that several items were selling at higher prices.

posted under - Inflation, Indian inflation updates, April inflation updates, Inflation at all time low, indian economy updates, economy of india, india and inflation
source - www.economictimes.com

Oil export earnings rise 17 per in 2009

April 8/09 - Despite facing a downturn in demand and consequently in prices since October 2008, India’s earning from oilmeal exports increased 17% to Rs 8,341 crore in 2008-09 even on a lower export volume. A firm trend in global markets during the first half of the FY09 has helped India beat the impact of recession on oilmeal exports.

Riding on substantial gains in price realisation in the first half of 2008-09, oilmeal continues to remain the highest export earner in the agri-commodity segment. During the year, it fetched about Rs 8,341 crore on an export volume of 5,421,607 tonne compared to Rs 7,109 crore against a volume export of 5,442,132 tonne in 2007-08.

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According to the Solvent Extractors’ Association of India (SEA), oilmeal exports in the first two quarters of 2008-09 jumped due to excellent demand and higher realisation of FOB prices. However, it stagnated in the third quarter. Exports declined heavily in the fourth quarter faced with a decline in meat and poultry production in its prime markets in South-east Asia, which happened due to dip in consumer demand for livestock products in the recession-hit countries.

posted under - Oilmeal earnings, oil exports, indian economy updates, economy of india, indian oil exports news, indian economy news, oilmeal in india, oilmeal exports

Economy Updates - Exports down 18% to $12 bn in March 2009

April 7/09(India Economy Updates) - The country seems all set to miss the pared down export target for 2008-09 with exports recording a fall in March 2009, for the sixth time in a row. Quick estimates made by the commerce department reveal that exports fell by 18% in March 2009 to $12 billion.

The aggregate export figure for the entire fiscal is, therefore, at $168.59 billion, which is more than a billion dollar short of the lower range of the revised target of $170-175 billion set by the government. The unofficial quick estimates, however, are sometimes quite different from the revised estimates officially issued at the end of the month.

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While desegregated figures are not available, a government official said that sectors such as textiles, handicrafts, carpets, leather, gems & jewellery and marine products continued to do badly. While demand for some of these products, especially textiles, has started picking up slightly in the EU market, demand from the US continues to be sluggish, the official added.

India exported goods worth $162 billion in 2008-09 registering a healthy growth over the previous fiscal. The 2008-09 fiscal began on a robust note with exports growing by more than 30% in the first six months. While the effects of the global demand slowdown started appearing in September with export growth slowing down to 10% in September 2008, the downslide started in October 2008 with exports entering the negative territory with a fall of 12.8% over October 2007.

Exports have not managed to get out of the negative zone ever since. Commerce and industry minister Kamal Nath, who had initially fixed the export target for 2008-2009 at $200 billion, brought it down to $170 billion-$175 billion in the last quarter of the fiscal year.

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With demand in key markets including the US, the EU and Japan slowing down, exports in most countries have been hit.

posted under - Exports , indian export news, Indian exports updates, economy of india, indian economy updates, indian economic news, economic news of india

India ranks second in industrial production among developing countries

India ranks among the top five developing countries in production of six major industrial items, including textiles, motor vehicles, chemicals and basic metals, according to a UN agency UNIDO.

In four out of the six industrial products - textiles, chemicals and chemical products, basic metals and electrical machinery and apparatus - India figures at number two only behind China.

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India's annual growth rate of manufacturing value added (MVA) has risen from 6.9 per cent in the period 2000-2005 to 12.3 per cent between 2005 and 2007, according to the year book of the United Nations Industrial Development Organisation (UNIDO).

It found that the share of MVA in India's gross domestic product (GDP) has risen to 14.8 per cent in 2006 from 13.8 per cent in 2001.

UNIDO found that the developing countries now produced almost 30 per cent of the world MVA compared to 16 per cent in 1990.

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"The increasing share of developing world vis-a-vis industrialised countries is also explained by the shift of location of manufacturing, especially assembling of final products from industrialised countries to developing countries," the UNIDO said.

posted under - industrial production, indian economy, economy of india, indian industrial output, output updates, indian economy updates, economy of india

FDI to remain robust - Goldman Sachs

The global economic slowdown will not affect the foreign direct investment (FDI) flow to India as the domestic demand remains "resilient", investment banker Goldman sachs said on Monday.

"FDI is showing positive signals," Tushar Poddar, an economist with Goldman Sachs said, adding: "We expect FDI inflows to remain significant in 2009-10, given India's relatively resilient domestic demand momentum."

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According to the bank, the FDI flow to India during September-January - the months when the credit crisis was at its peak - amounted to $9.2 billion, higher than $7.9 billion in the corresponding period last year.

Pranjul Bhandari, another economist at Goldman, said: "India's balance of payments (BOP) may have had its worst quarter in October-December 2009, when it showed a deficit of $18 billion."

"NRI deposits showed an uptick last fiscal, but we expect it to remain flat in 2009-10. We expect NRI deposits coming due in the next year ($32 billion) to get rolled over to a large extent, but do not expect large fresh inflows," he added.

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External commercial borrowings (ECBs) are expected to moderate in in the current fiscal. Although ECBs have slowed to $9.1 billion during September-February from $11.8 billion in the previous six months.

"In 2009-10, we expect ECBs to remain positive due to higher growth and yields in India, notwithstanding the $7 billion of outstanding commercial loans coming due," Bhandari said.

Private remittances from Indians working abroad slowed to $4.3 billion in the October-December quarter from $7.9 billion in the July-September quarter.

"We expect this to remain weak, but do not expect much further weakness from current levels," she said.

Bhandari added that the merchandise trade deficit had fallen to $5 billion in February from a peak of $14 billion in August.

Posted under - FDI in india, indian economy updates, economy of india, recession and indian economy, Indian FDI, foreign direct investment in india, India FDI, FDI updates
source - www.economictimes.com

G20 Nations agree to trilion dollar financial plan for lifting global economy

G20 summit updates April 2009- World leaders agreed a trillion-dollar deal on Thursday to combat the deepest economic downturn since the Great Depression.

At a G20 summit, they also signed off on plans to commission blacklists of tax havens and tighten financial rules to bring hedge funds and credit rating agencies under closer supervision.

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"This is the day that the world came together, to fight back against the global recession. Not with words but a plan for global recovery and for reform and with a clear timetable," British Prime Minister Gordon Brown, the summit host, said.

World markets reacted positively. The index of top European shares was up 5 percent after Japan's Nikkei gained 4.4 percent. On Wall Street, the Nasdaq was up 4 percent and the Dow Jones 3.6 percent.

Brown said that while there were "no quick fixes," the decisions meant that "we can shorten the recession and we can save jobs."

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French President Nicolas Sarkozy said the results were beyond what could have been imagined.

Addressing a key demand from France and Germany, Brown said the leaders agreed "there will be an end to tax havens that do not transfer information on request. The banking secrecy of the past must come to an end."

He said leaders agreed to commit new resources of 1 trillion dollars that are available to the world economy through the International Monetary Fund and other institutions.

This included 250 billion dollars of IMF reserve units called Special Drawing Rights. "This is available to all IMF members," Brown said. In addition, the IMF would see its own resources tripled, with up to $500 billion of new funds.

The G20 also agreed a trade finance package worth $250 billion over two years to support global trade flows.

posted under - G20 updates, G20 2009, G20 summit updates, economic recession updates, economic crises updates, world economies updates, G20 meeting