Macroeconomic Forecast India

June 2006 | Macroeconomic Forecasts

BMI View: India's rapid growth rate is going to ease to 7.5% in FY2006/07 as its vital consumption sector begins to flag. Higher fuel prices will cause inflation to accelerate as the year progresses, hurting real wages. This, together with falling asset prices, will cause a slump in consumer confidence. Furthermore, policy will add to the downturn, with interest rates rising further to combat inflation and with government spending being curtailed to consolidate the large budget deficit. That said, India will remain one of the fastest growing economies in Asia and its deeply entrenched consumer culture should limit the effects

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