Slowdown is slowing down, forecasts D&B

MUMBAI, INDIA :According to D&B Economy Forecast, the sharp contraction in economic activity- evident during the past few months- is now beginning to witness some abatement.

Modest improvement in steel and cement production, positive growth in auto sales and resilient performance of the capital goods sector point towards incipient signs of stability returning back to the domestic economy, as per the latest report by D&B.

While it may be too early to conclude a sustained demand recovery in the economy based upon these indicators, they do provide a base for the inevitable economic recovery to take place.

Downside risks to demand continue to exist as uncertainty on the employment and political front still prevails.

Kaushal Sampat, COO, Dun & Bradstreet India explains that although some early signs of stability have been visible in the recent past, the revival in the economic activity will take some time as the confidence level still remains low, demand conditions are subdued and some uncertainty prevails in the economy. “Therefore, we expect IIP growth to remain subdued till the first quarter of FY10.”

The forecast picks its direction from tracking some macro variables. Capital goods have registered double-digit growth for the second consecutive month and production of Capital goods sector grew by 10.4 per cent during Feb-09. Infrastructure growth has improved marginally too and the Index of six core-infrastructure industries grew by 2.2 per cent in Feb-09 as compared to 1.5 per cent in Jan-09. But the double digit growth registered by the capital goods for the second consecutive month in Feb is a positive sign, as per the report.

Recent data available also points to some buoyancy in investment proposals in the last quarter of the previous financial year, which may provide some cushion to overall industrial production in the forthcoming months.