THINGS LOOK GOOD!
By Ruma Dubey
Call it the effect of the World Bank report or the better-than-expected WPI numbers, the markets indeed celebrated, closing at a five-week high.
WPI inflation fell to its lowest since July 2013 to 6.16% for Dec v/s 7.52% in Nov. This lower WPI was on account of lower primary articles inflation while manufacturing costs remained stable. Post this data, the market is now certain that on 28th Jan, RBI will not hike rates and maintain a status quo.
The day had actually started on a positive note with the World Bank also publishing a much more optimistic report.
A quick synopsis of the World Bank report:
- India's economy will grow over 6% in 2014-15, 6.6% in 2015-16 and 7.1% by 2016-17 on the back of recovery in global demand and increase in domestic investments.
- China’s growth is to stay flat at 7.7% and then for the next two years, expected to remain stagnant at 7.5% levels.
- Global GDP growth is projected to firm from 2.4 percent in 2013 to 3.2 percent this year, stabilizing at 3.4 percent and 3.5 percent in 2015 and 2016[1], respectively, with much of the initial acceleration reflecting stronger growth in high-income economies.
- Growth in Europe & Central Asia is expected to have a stable growth at 3.5% in 2014, gradually lifting to 3.7% and 3.8% in 2015 and 2016, respectively. Risks include a return to weakness in the Euro Area or Russia, disorderly adjustment to tighter global financial conditions, and further sharp declines in commodity prices.
This is actually a very good report as it suggests that 2014 could see a bounce back of most of the economies in the developed countries. And this is very good for emerging economies like India as it bodes more exports and an overall spurt in demand. And for those, who believe that India and China’s growth story is the same, for once, the growth rate between the two, as per the World Bank will actually narrow.
What is also apparent is that though India is not exactly going to roar like the Asian Tiger, it is surely not going down like a whimpering rat. The growth is expected to get better, slowly but gradually moving up. And that is the good news which we need to read into. Now we only hope that a stable Govt comes to lead this growth.