IIP declines by 3.5% in March 2012
In March 2012 the Index of Industrial Production (IIP) declined by 3.5%, which was significantly lower than the market's expectation. This was due to a sharp decline in the manufacturing sector. The February 2012 IIP numbers remain unchanged at 4.1%. For FY2012, the IIP growth stands at 2.8% as against 8.2% in FY2011.
Outlook
The IIP numbers have been quite volatile recently and again turned negative. Based on the 3-monthly moving average, the IIP growth is 0.6% whereas for FY2012 the growth stands at 2.8%. Both the indicators point to a slowdown in the industrial activity which could affect the GDP growth forecast for Q4FY2012. In view of the inflationary pressures emanating from the high crude oil prices and the depreciation of the local currency, the market expects the RBI to maintain status quo in the coming mid quarter policy review.
The IIP numbers have been quite volatile recently and again turned negative. Based on the 3-monthly moving average, the IIP growth is 0.6% whereas for FY2012 the growth stands at 2.8%. Both the indicators point to a slowdown in the industrial activity which could affect the GDP growth forecast for Q4FY2012. In view of the inflationary pressures emanating from the high crude oil prices and the depreciation of the local currency, the market expects the RBI to maintain status quo in the coming mid quarter policy review.
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