Crops are shriveling as India faces the specter of drought, but economists say they are still upbeat about the country’s economic prospects.
They are banking that a strong industrial performance will help offset the impact of the worst monsoon in years in Asia’s third-largest economy.
Analysts have been buoyed by new data showing industrial production jumped by 7.8 percent in June from a year earlier — its quickest pace in 16 months.
PHOTO: AFP
Output was spurred by record low interest rates and government stimulus that have prompted consumers to purchase factory-made products such as cars and refrigerators.
The figures last week came on top of a slew of other economic indicators suggesting India is starting to rebound from the impact of the worst global downturn since the 1930s.
“The domestic economy is slowly but definitely reviving,” said Deepak Lalwani, India director at investment house Astaire & Partners in London.
Even with “the rain gods playing hooky,” a robust industry and service sector outlook “should offset the [economic] hit from agriculture,” said Rajeev Malik, economist at Macquarie Securities.
Malik said he was sticking to his forecast of 7 percent growth for the current fiscal year to March, although he said “a bigger hit to agriculture might warrant a downward revision.”
India’s economy expanded by 6.7 percent last year after growing by a scorching 9 percent for several years in a row.
HSBC economist Robert Prior-Wandesforde, who expects 6.2 percent growth, said the June industrial output number “suggests there is plenty of momentum” outside the agricultural sector.
He said there was “plenty more in the way of positive effects” to come from the central bank’s aggressive interest rate cuts and government stimulus.
“The upside from industrial activity [is] likely to mitigate the negative impact of poor rains,” Goldman Sachs analysts Tushar Poddar and Pranjul Bhandari wrote in a note to clients.
Economists’ optimism about overall prospects stems partly from the reduced role that agriculture now plays in India’s economy — accounting for around 17 percent of GDP, down from 50 percent in the 1950s.
For India’s 235 million farmers, many of them smallholders eking out a living, a single bad monsoon can spell financial disaster, wiping out livelihoods.
India’s official weather map is a mass of red — the color the weather office uses to show “deficient” rains, defined as 20 percent to 59 percent below normal.
Some 177 out of India’s 626 districts are in the grip of drought, with rice crops the worst hit. Only a thin strip along the western coast has received normal rain during this monsoon season, which runs from June to September.
In Italy’s storied gold-making hubs, jewelers are reworking their designs to trim gold content as they race to blunt the effect of record prices and appeal to shoppers watching their budgets. Gold prices hit a record high on Thursday, surging near US$5,600 an ounce, more than double a year ago as geopolitical concerns and jitters over trade pushed investors toward the safe-haven asset. The rally is putting undue pressure on small artisans as they face mounting demands from customers, including international brands, to produce cheaper items, from signature pieces to wedding rings, according to interviews with four independent jewelers in Italy’s main
Japanese Prime Minister Sanae Takaichi has talked up the benefits of a weaker yen in a campaign speech, adopting a tone at odds with her finance ministry, which has refused to rule out any options to counter excessive foreign exchange volatility. Takaichi later softened her stance, saying she did not have a preference for the yen’s direction. “People say the weak yen is bad right now, but for export industries, it’s a major opportunity,” Takaichi said on Saturday at a rally for Liberal Democratic Party candidate Daishiro Yamagiwa in Kanagawa Prefecture ahead of a snap election on Sunday. “Whether it’s selling food or
CONCERNS: Tech companies investing in AI businesses that purchase their products have raised questions among investors that they are artificially propping up demand Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday said that the company would be participating in OpenAI’s latest funding round, describing it as potentially “the largest investment we’ve ever made.” “We will invest a great deal of money,” Huang told reporters while visiting Taipei. “I believe in OpenAI. The work that they do is incredible. They’re one of the most consequential companies of our time.” Huang did not say exactly how much Nvidia might contribute, but described the investment as “huge.” “Let Sam announce how much he’s going to raise — it’s for him to decide,” Huang said, referring to OpenAI
Nvidia Corp’s negotiations to invest as much as US$100 billion in OpenAI have broken down, the Wall Street Journal (WSJ) reported, exposing a potential rift between two of the most powerful companies in the artificial intelligence (AI) industry. The discussions stalled after some inside Nvidia expressed concerns about the transaction, the WSJ reported, citing unidentified people familiar with the deliberations. OpenAI makes the popular chatbot ChatGPT, while Nvidia dominates the market for AI processors that help develop such software. The companies announced the agreement in September last year, saying at the time that they had signed a letter of intent for a strategic
RSS