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Domestic demand to sustain growth: Report
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IANS | 25 Jul, 2022
Domestic demand will help sustain India's growth momentum as
high-frequency data for June remained strong, with gains concentrated in
services-led consumption, whilst data for industrial activity exhibited
a mixed trend and external demand moderated further, Morgan Stanley
said.
Early trends for July indicate data holding across
sectors with mobility (ex-residential) fairly steady and unemployment
levels lower than in the previous month. Credit growth continues to rise
-- it has reached its highest level since April 2019.
CPI
remained stable at 7 per cent YoY in June, similar to May's levels, in
line with our estimate. Global commodity prices have moderated and
high-frequency food prices have increased at a softer-than-expected
pace. The moderation in commodity prices has brought a respite to rising
WPI inflation, which moderated a tad in June, to 15.2 per cent YoY,
with monthly sequential rise being the slowest in six months.
Trade
deficit made another high but is likely to moderate gradually: The
trade deficit widened to an all-time high of US$25.6 billion in June,
averaging US$20.7 billion in CYTD2022. On a three-month annualised
basis, the trade deficit has widened to 8.7 per cent of GDP, while the
trade deficit ex oil is tracking at 4.3 pr cent of GDP in June, Morgan
Stanley said.
Global growth is expected to slow to 1.5 per cent
YoY in QE December 2022 from 4.7 per cent in QE December 2021. "We see
three channels of transmission: 1) slower trade growth, 2) tighter
financial conditions, and 3) changes in commodity prices. We thus lower
our expectations of export growth, which is already showing some signs
of moderation, with some follow-through to domestic capex demand, given
the correlation between exports and capex," Morgan Stanley said.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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