Aug. 6 (Bloomberg) -- India’s economic growth may slow by as much as 2 percentage points in the year to March 2010 if monsoon rains remain deficient and hurt farm production, according to UBS AG.
“If rainfall fails to improve more significantly we fear a supply shock and a drop in agricultural output,” Philip Wyatt, a senior economist at UBS in Hong Kong, said in a report today. “This would mean real gross domestic product growth could be 1 to 2 percent lower than our current expectation of 7 percent.”
India relies on monsoon rains to produce food for its 1.2 billion people, as more than half of the nation’s arable land isn’t irrigated. Lower farm output may cut incomes among the 742 million people who live in the countryside and erode their purchasing power, weakening an economy already forecast by the central bank to expand at the slowest pace in seven years.
Rainfall of 5 percent below average would see farm output “stay static” and may knock less than 0.5 percentage points off India’s growth rate, Wyatt wrote. A rain deficiency of closer to 10 percent would reduce gross domestic product growth by 1 percentage point and a 20 percent shortfall may chop off 2 percentage points, according to the UBS report.
India’s monsoon, the main source of irrigation for the nation’s 235 million farmers, is 25 percent below average so far this season, NDTV Profit reported today, citing A.B. Mazumdar, the deputy director general of the weather bureau.
‘Don’t Look Good’
Insufficient rain has caused acreage of all major crops to lag behind year-ago levels, denting prospects for bigger harvests of rice, oilseeds and sugar cane. India, the world’s second-biggest rice producer, planted monsoon paddy crops in 28 percent less area this year because of scant rain in the main growing regions, according to Farm Minister Sharad Pawar.
“The omens don’t look good,” Wyatt said. The bank will review the possibility of any downgrade in its 7 percent growth projection for India after viewing rainfall data for mid-August, he said.
The $1.2 trillion economy grew 6.7 percent in the year to March 31, 2010. That compares with an average growth rate of about 8.8 percent in the previous five years.
Thursday, August 06, 2009
China '09 GDP growth seen at 8 pct - govt think-tank
SHANGHAI (Reuters) - China's gross domestic product is expected to grow about 8 percent this year as the economy recovers, an influential government think-tank said in a report released on Thursday.
China's annual GDP growth rate had slowed to 6.1 percent in the first quarter of this year but picked up to 7.9 percent in the second quarter, ending seven consecutive quarters of deceleration, as government support measures helped an economic recovery take hold.
The State Information Centre said in a report carried in the official Shanghai Securities News that investment remained the driver of the rebound in the world's third-largest economy, although a slide in exports was abating as the environment for overseas demand became less severe and government measures such as export tax rebates took effect. China's exports are expected to fall 17.5 percent this year, it said, although imports were forecast to decline at a more modest 16 percent rate, and the trade surplus was likely to shrink to $220 billion.
The report added that China's consumer prices should begin rising again before the end of the year, due in part to higher prices for oil and other resources, although surplus production capacity would restrain price increases.
It forecast the consumer price index would show a 0.5 percent decline year-on-year for 2009.
China's annual GDP growth rate had slowed to 6.1 percent in the first quarter of this year but picked up to 7.9 percent in the second quarter, ending seven consecutive quarters of deceleration, as government support measures helped an economic recovery take hold.
The State Information Centre said in a report carried in the official Shanghai Securities News that investment remained the driver of the rebound in the world's third-largest economy, although a slide in exports was abating as the environment for overseas demand became less severe and government measures such as export tax rebates took effect. China's exports are expected to fall 17.5 percent this year, it said, although imports were forecast to decline at a more modest 16 percent rate, and the trade surplus was likely to shrink to $220 billion.
The report added that China's consumer prices should begin rising again before the end of the year, due in part to higher prices for oil and other resources, although surplus production capacity would restrain price increases.
It forecast the consumer price index would show a 0.5 percent decline year-on-year for 2009.
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