India's economy, buffeted by the global meltdown, could start recovering by mid-year amid signs of revival in business confidence, manufacturing and credit growth, economists forecast.
The upbeat outlook, boosted by expectations of a healthy harvest fuelling consumer spending, has driven India's benchmark Sensex share index to a six-month high as fund managers switch their country ratings to "overweight" from "underweight."
The "domestically driven Indian economy will begin to recover palpably from mid-year onwards," Rajeev Malik, economist at Australia's Macquarie Securities, said.
Indices measuring early changes in economic activity and business confidence and forecasts published by global financial houses in recent days suggest that India's economy is set to turn the corner.
However, the potential emergence of a politically unstable ruling coalition after general elections end on May 13 could disrupt the scenario, analysts warn.
Nevertheless, Swiss bank UBS said its "base case scenario" was for the Indian economy and corporate earnings "to bottom out by the second half of 2009/10 and for full recovery in 2010/11."
There's a "strong likelihood of an upturn in industrial activity by June," UBS economist Philip Wyatt said.
Britain's Barclays Capital has gone so far as to bullishly declare "the slump in activity in emerging Asia is over" - driven by India and China.
"Domestic leading indicators such as business sentiment are showing signs of stabilisation and the next few months of data are likely to see an upturn in most (Asian) countries," it said.
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Sunday, May 3, 2009
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