Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

REAL-Economics.com

Macroeconomics

Here at last comes Make in India, and the world's fastest-growing major economy is set for a cyclical acceleration in September 2016-March 2017. India's exports resumed growing in June, up 1.3% YoY; they were up 3.2% YoY in rupee terms for the April-June quarter, the first quarterly increase after 5 quarters of export contraction. With US demand gaining momentum (as suggested by ISM new orders over the past 4 months), India's exports should accelerate through the rest of 2016.India's exports of goods and services expanded 19-fold in the first 20 years after 1991, then decelerated for 3 years, and declined outright in 2015 and 1Q2016. That cyclical drag is now ending. There already were pockets of double-digit growth in industry (office/computer equipment, medical/precision equipment, consumer electronics &amp; communication equipment all expanded output by 15-19% YoY in February-May 2016); the outdated IIP under-estimates the momentum in India's manufacturing, which is better captured by the new GDP series (but cyclical momentum was still constrained by weak exports). As exports gain strength, and are complemented by rural demand helped by the first good monsoon in 3 years, India's manufacturing revival will gain strength -- and real GDP should grow over 8% YoY in 2H FY2016/17.The cyclical rebound will be aided by an improving macroeconomic backdrop. With imports still declining much more than exports (helped by the terms-of-trade gain from falling oil prices), the 4-quarter moving average of the current account deficit narrowed to 1.1% of GDP in FY2015/16 and is likely to narrow further to 0.4% of GDP by June 2016. The export revival is likely to deliver a current account surplus in the April-June quarter and for the whole of FY2016/17, allowing the Indian rupee to outperform other emerging market currencies over the next 6-8 months. Stay Overweight in India.

Here at last comes Make in India, and the world's fastest-growing major economy is set for a cyclical acceleration in September 2016-March 2017. India's exports resumed growing in June, up 1.3% YoY; they were up 3.2% YoY in rupee terms for the April-June quarter, the first quarterly increase after 5 quarters of export contraction. With US demand gaining momentum (as suggested by ISM new orders over the past 4 months), India's exports should accelerate through the rest of 2016.India's exports of goods and services expanded 19-fold in the first 20 years after 1991, then decelerated for 3 years, and declined outright in 2015 and 1Q2016. That cyclical drag is now ending. There already were pockets of double-digit growth in industry (office/computer equipment, medical/precision equipment, consumer electronics &amp; communication equipment all expanded output by 15-19% YoY in February-May 2016); the outdated IIP under-estimates the momentum in India's manufacturing, which is better captured by the new GDP series (but cyclical momentum was still constrained by weak exports). As exports gain strength, and are complemented by rural demand helped by the first good monsoon in 3 years, India's manufacturing revival will gain strength -- and real GDP should grow over 8% YoY in 2H FY2016/17.The cyclical rebound will be aided by an improving macroeconomic backdrop. With imports still declining much more than exports (helped by the terms-of-trade gain from falling oil prices), the 4-quarter moving average of the current account deficit narrowed to 1.1% of GDP in FY2015/16 and is likely to narrow further to 0.4% of GDP by June 2016. The export revival is likely to deliver a current account surplus in the April-June quarter and for the whole of FY2016/17, allowing the Indian rupee to outperform other emerging market currencies over the next 6-8 months. Stay Overweight in India.      

Export-Led Recovery to Spur Industry's Many Pockets of Strength

Co-founder & Managing Director, Marketnomix 

Rajan Govil

Co-founder & Managing Director

Marketnomix 

Index of Industrial Production (IIP) grew 0.1% y-o-y in March 2016 compared to a growth of 2% y-o-y in February 2016 as per official figures. After adjusting for one additional working day in February (there were 21 working days in February 2016 compared to 20 working days in February 2015), IIP in February had seen a decline of 2.9% y-o-y in February 2016. The latest reading for March thus continues to reflect weakness in industrial output. For the quarter ended March 2016, production grew by…

Index of Industrial Production (IIP) grew 0.1% y-o-y in March 2016 compared to a growth of 2% y-o-y in February 2016 as per official figures. After adjusting for one additional working day in February (there were 21 working days in February 2016 compared to 20 working days in February 2015), IIP in February had seen a decline of 2.9% y-o-y in February 2016. The latest reading for March thus continues to reflect weakness in industrial output. For the quarter ended March 2016, production grew by…

India: Manufacturing Output Remains Weak, Declining for Fifth Straight Month

India

SML Isuzu Limited manufactures commercial vehicles, including buses, ambulances and standard trucks.

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Sml Isuzu Ltd (SM IN)

Export-Led Recovery to Spur Industry's Many Pockets of Strength

Here at last comes Make in India, and the world's fastest-growing major economy is set for a cyclical acceleration in September 2016-March 2017....

Prasenjit K. Basu

India: Manufacturing Output Remains Weak, Declining for Fifth Straight Month

Index of Industrial Production (IIP) grew 0.1% y-o-y in March 2016 compared to a growth of 2% y-o-y in February 2016 as per official figures. After...

Rajan Govil

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