Macroeconomic Forecast India

Purchasing managers indices (PMI) for the month of January came in much stronger than expected, posing upside risk on our end-FY2011/12 (April-March) real GDP growth forecast of 6.8%. Manufacturing PMI came in at 57.5, up from 54.2 in December, marking the second straight month of increase. Meanwhile, services PMI ticked up for the third consecutive month, with the figure coming in at 58.0; also up from 54.2 in the previous month. While the recent spate of positive data has undoubtedly been encouraging, we highlight that export growth figures, credit growth trends, and various leading indicators still paint a gloomy picture of the economy.

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