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Gulf Today
3 days ago
- Business
- Gulf Today
India's economy outperforms peers as it surges 7.4% in Q1
India's economy surged 7.4% in January to March, much faster than forecasts and driven by construction and manufacturing, although uncertainty about US tariffs poses risks to the outlook. Gross domestic product in Asia's third-largest economy was above a forecast year-on-year growth of 6.7% in a Reuters poll, and was up from a revised 6.4% expansion in the previous quarter, official data released on Friday showed. It was the fastest increase in GDP since January-March 2024. 'India's growth is holding up in a growth-scarce environment,' said V. Anantha Nageswaran, India's chief economic adviser, after the release of the data, adding India outshone other large and contemporary economies. They include China, which grew 5.4% in January-March. The Reserve Bank of India (RBI) expects GDP growth of 6.5% in the fiscal year beginning April 1. At that rate, India will remain the fastest growing major economy and could match Japan for size this year at $4.18 trillion, according to projections by the IMF. The gross value added (GVA), seen as a more accurate measure of underlying economic activity, grew 6.8% in the first three months of 2025, compared to a revised expansion of 6.5% in the previous quarter. GVA strips out indirect taxes and government subsidy payouts, which tend to be volatile. Manufacturing output rose 4.8% year-on-year in January-March, the final quarter of India's fiscal year, compared with a revised expansion of 3.6% in the previous quarter, while construction activity jumped 10.8%, up from 7.9% in the previous quarter. 'The GDP print for Q4 is higher than expected. This indicates that the economy has recovered from the slowdown seen in the middle of last year,' said Sakshi Gupta, principal economist, HDFC bank. However, the outlook for the current fiscal year faces challenges given a global slowdown and tariff uncertainties, she said, referring to U.S. President Donald Trump's tariff hikes. Trump proposed reciprocal tariffs of 26% on imports from India but they are on hold until July 9 as trade talks continue. Growth in private consumer spending, which accounts for 57% of Indian GDP, eased to 6% year-on-year in January-March, from an upwardly revised 8.1% expansion in the previous quarter, as urban spending weakened whereas rural demand for durables and farm equipment like tractors improved. Retail inflation, which eased to a near six-year low of 3.16% in April, alongside a favourable monsoon forecast, is expected to keep food prices in check and pave the way for the Reserve Bank of India to cut its policy repo rate again next month. Government spending fell 1.8% in the three months through March compared to a revised expansion of 9.3% in the previous quarter, the data showed. Capital spending rose 9.4% in the quarter though private firms are expected to delay investments amid global uncertainties including trade tariffs. Growth for the fiscal year was estimated at 6.5% and the size of the Indian economy rose to 330.68 trillion rupees ($3.87 trillion) as of the end of March. Economists said that while economic growth in the current fiscal year could be affected by global uncertainties weighing on near term investment intentions, a strong monsoon, tax cuts announced by the government and continued interest rate cuts could support domestic demand. New Zealand hails trade talks: New Zealand's deputy prime minister said on Friday that talks over a free trade agreement between his country and India were ongoing, but he didn't provide a timeline for when the two nations could eventually sign a deal. Winston Peters, who is on a two-day visit to India, said that the negotiations were 'going with real meaning now,' calling them 'a breakthrough in our economic relationship.' India and New Zealand began negotiations in March for a trade pact, and had aimed to sign a deal in 60 days. The deal will significantly bolster economic ties between the two countries, but it has faced delays because of differences over tariffs on dairy products. Bilateral trade between India and New Zealand stood at $1.7 billion in the 2023-24 financial year. Talks between India and New Zealand were taking place amid global trade tensions, after US President Donald Trump's decision to impose now-paused reciprocal tariffs on imported goods from several countries, including India. Earlier this month, India and the United Kingdom clinched a trade deal. India is also engaged in trade talks with Washington. Peters, who met with India's Group of 20 emissary, Amitabh Kant, in New Delhi, said that India was New Zealand's 12th-largest partner in trade and 'we are determined that we're going to work to change that.' 'Our strengths, from food and beverage products to agriculture, forestry, horticulture, education and tourism are world class. And our innovation in areas like outer space and renewable energy will find a welcoming partner in India,' he said. Peters said that the relationship between the two countries extended to defense and security, calling it a 'priority for New Zealand in the Indo-Pacific.' Agencies
Yahoo
22-05-2025
- Business
- Yahoo
BofA joins peers in lifting rupee forecast; sees 84/USD by December
By Nimesh Vora MUMBAI (Reuters) -Bofa Research expects the Indian rupee to strengthen to 84 per U.S. dollar by December 2025 from a prior forecast of 87, joining peers in turning more bullish on the currency amid improving capital inflows and trade engagement. BofA expects the rupee to track broader weakness in the U.S. dollar and be supported by stable domestic fundamentals, it said on Thursday, adding that the Reserve Bank of India's (RBI) pro-growth stance is likely to attract renewed equity inflows, The RBI cut rates in February and April this year to support growth, with traders pricing in a near-certain 25 basis-point reduction at the June meeting. A potential revival in economic activity could boost foreign interest in Indian stocks. After pulling out $13.5 billion from equities in the January-March period, foreign investors have already pumped in $2.5 billion so far this quarter. An improvement in India's terms of trade, aided by lower oil prices, is expected to keep the current account deficit within a manageable range. Additionally, while India was flagged by the U.S. as a potential target for higher reciprocal tariffs, ongoing efforts to secure a trade agreement have helped ease those concerns to an extent, BofA said. "These factors are likely to support INR strength through the remainder of the year." BofA's forecast aligns with projections from Goldman Sachs and MUFG Bank. MUFG, which had earlier forecast the rupee at 87.5, revised its target about three weeks ago to 84. Around the same time, ANZ upgraded its December forecast for the rupee to 86 from earlier expectations of 88.5. "We see a mild appreciation bias for the rupee driven by dollar softness, an improving domestic growth outlook, the return of capital flows, and lower commodity prices," said Sakshi Gupta, principal economist at HDFC Bank.
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First Post
22-05-2025
- Business
- First Post
Will Indian Rupee's value appreciate to 84 against the US Dollar? Here's what top international banks say
Bank of America (BofA) Research has revised its forecast for the Indian rupee, projecting the currency to strengthen to 84 per US dollar by December 2025, from a previous estimate of 87 read more The value of Indian rupee is expected to hit 84 against the US Dollar, revised from the previously expected 87. AFP Bank of America (BofA) Research has revised its forecast for the Indian rupee, projecting the currency to strengthen to 84 per US dollar by December 2025, from a previous estimate of 87. The call reflects a broader shift in sentiment among analysts, who are increasingly bullish on the rupee amid improved capital inflows and a more favorable trade outlook. BofA said in a note Thursday (May 22) that it expects the rupee to benefit from a weakening dollar and India's stable domestic fundamentals. 'The Reserve Bank of India's (RBI) pro-growth stance is likely to attract renewed equity inflows,' the bank said. STORY CONTINUES BELOW THIS AD The RBI has cut interest rates twice this year— first in February, then in April— to support economic growth. Traders are pricing in another 25-basis-point cut at the central bank's upcoming June meeting. The policy easing, coupled with signs of an economic rebound, could help rekindle foreign investor interest in Indian equities. After pulling out $13.5 billion in the first quarter, foreign investors have returned with $2.5 billion in inflows so far this quarter. BofA also noted that lower oil prices are helping to improve India's terms of trade, which should keep the current account deficit in check. While the US had flagged India as a potential target for higher reciprocal tariffs earlier this year, BofA said that 'ongoing efforts to secure a trade agreement have helped ease those concerns to an extent.' 'These factors are likely to support INR strength through the remainder of the year,' the bank said. BofA's revised outlook is in line with similar upgrades by other institutions. MUFG Bank, which had previously forecast the rupee at 87.5 to the dollar, revised its target to 84 about three weeks ago. Around the same time, ANZ raised its December projection to 86 from 88.5. 'We see a mild appreciation bias for the rupee driven by dollar softness, an improving domestic growth outlook, the return of capital flows, and lower commodity prices,' said Sakshi Gupta, principal economist at HDFC Bank. With inputs from agencies
Business Recorder
13-05-2025
- Business
- Business Recorder
India's inflation slows to lowest in nearly 6 years, making room for more rate cuts
NEW DELHI: India's retail inflation remained below the central bank's 4% target for the third consecutive month as food prices rose at a slower pace, opening up room for more interest rate cuts to support growth in the world's fifth-largest economy. Annual retail inflation slowed to 3.16% in April from 3.34% in March, marking its lowest level since July 2019 and coming in below economists' estimate of 3.27% in a Reuters poll. Inflation in food prices - which accounts for nearly half of the consumption basket - slowed to 1.78% from 2.69% in March, its lowest since October 2021. Vegetable prices continued their downward trend, falling 11%year-on-year, compared to a 7.04% fall in March. 'The CPI (consumer price index) print today sets the stage for another rate cut by the RBI in its June policy of 25 basis points,' said Sakshi Gupta, an economist at HDFC Bank. Last month, the Reserve Bank of India (RBI) lowered its key policy rate for a second consecutive time, and signalled more cuts by changing its monetary policy stance to 'accommodative' from 'neutral'. India economic outlook dims further as US tariffs dent business sentiment: Reuters poll It cut its GDP growth estimate for the ongoing fiscal year to 6.5% from 6.7% and said it sees inflation at 4%, compared to 4.2% earlier. Prices of cereals rose 5.35% against a 5.93% increase in March, while those of pulses fell 5.23% compared to a 2.73% fall in the same period. Core inflation, which excludes volatile items such as food and energy and is a better gauge of domestic demand, steadied at 4%-4.1% in April from 4.1% in the previous month, according to two economists. 'We expect the retail inflation to remain in the range of 3.6% to 3.8% during April-June period on the expectations of a normal monsoon,' said Rajni Thakur, an economist at L&T Finance.
Time of India
13-05-2025
- Business
- Time of India
India's retail inflation eases to a 6-year low of 3.16% in April
India's retail inflation eased to a six-year low of 3.16 per cent in April from 3.34 per cent in March, driven by a further moderation in food prices. This marks the third consecutive month that inflation has remained below the Reserve Bank of India's 4% medium-term target. A Reuters poll of 43 economists suggested inflation fell to 3.27% in April. Food inflation, which accounts for nearly half of the Consumer Price Index (CPI) basket, slowed to 1.78 per cent in April, compared to 2.69 per cent in March. 5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like People thought hearing aids were expensive till they saw this. Read more Learn More Undo Intense heatwaves this summer did little to affect a robust harvest, offering much-needed relief to many Indian households, which allocate a significant portion of their budgets to food. ET Online Rural inflation cooled to 2.92 per cent in April from 3.25 per cent in March, while urban inflation contracted to 3.36% compared to 3.43 per cent a month earlier. Live Events The Consumer Price Index (CPI) based inflation was 3.34 per cent in March and 4.83 per cent in April 2024. It was 3.15 per cent in July 2019. "Inflation inched down to 3.16% in April on the back of a continuous broad-based drop in food prices, including of vegetables, cereals and pulses. The CPI print today sets the stage for another rate cut by the RBI (Reserve Bank of India) in its June meeting, of 25 basis points," said Sakshi Gupta, Principal Economist, HDFC Bank, Gurugram. Kitchen staples Vegetable prices fell 11% year-on-year in April, compared to a 7.04% fall in March. Prices of cereals rose 5.35% against a 5.93% increase in March, while those of pulses fell 5.23% compared to a 2.73% fall in the same period. Early predictions of above-average monsoon rains this year have raised expectations of stronger agricultural output and higher rural demand in a largely agriculture-dependent economy. Wholesale price index-based inflation is expected to have eased to 1.76% last month, down from 2.05% in March, the survey also showed. More room for RBI rate cuts With inflation predicted to stay subdued, the RBI has more room to cut interest rates to support a slowing economy. RBI Governor Sanjay Malhotra, while announcing the Monetary Policy Committee's decision last month, said that inflation has been on a downward trend, supported by a favourable outlook on food prices. He noted that inflation is expected to ease further in FY26, potentially offering relief to households grappling with cost pressures. However, the central bank cautioned that it remains alert of global uncertainties. The central bank has projected the CPI inflation for the financial year 2025-26 at 4 per cent, with Q1 at 3.6 per cent; Q2 at 3.9 per cent; Q3 at 3.8 per cent; and Q4 at 4.4 per cent.
