- Naked Capitalism: Guest Post: “How Can No One See An Imminent Fall in Chinese GDP and a Secular Slowdown Thereafter?”
Power generation in developing economies where manufacturing is a high % of GDP should correlate well with GDP growth. China’s power generation declined more than 8% in November. In his FT.com Long Room posting, Joules Watt concludes that would correspond to a GDP growth of only 1.5% y-o-y based on his regression analysis of power generation vs. GDP growth.
Rare is an analyst willing to even contemplate low-digit growth rates for China in 2009, let alone NO GROWTH (Jim Walker from Asianomics (ex CLSA) predicts 0-4% growth). But, while history doesn’t repeat itself, it rhymes. During its first 30 years of recovery and industrialization after WW2, Japan experienced several “growth recessions” when its growth halved from the boom times. But in the mid 1970s recession, it got much worse. Industrial production growth went from +16% y-o-y throughout the first half of 1973 to -19% in February 1975! Real y-o-y GDP growth went from more than 10% to solidly negative for a few quarters in late 1974 and early 1975.
Foreign institutional investors, or FIIs, the key drivers of the Indian stock market in the past few years, pulled out at least $13 billion (about Rs62,880 crore) in 2008, the most in 15 years.
FIIs have invested a net $50.59 billion in Indian equities since Sebi opened up the stock markets to them in 1993.FII inflows had increased to about $140 billion, . . . the portfolio of FIIs has shrunk to about $70-80 billion, according to estimates provided by fund managers.
The mid-year economic review, which was tabled in Parliament on Tuesday, has said that “an aggressive monetary policy may be necessary if the global economic depression continues to adversely affect manufacturing”, thereby indicating a further cut in interest rate.
On fiscal deficit, the target is likely to be missed by a wide margin. According to Virmani, India’s fiscal deficit would be at least 5% of the GDP this financial year, which means a 2% increase in the fiscal deficit.