S&P sees economic upturn in July
The Economic Times, February 06, 2009, Page 11
RBI Steps To Help In Recovery; India To Grow At 5.8-6.3% In ’09: Agency
Our Bureau MUMBAI
STANDARD & Poor’s sees a turnaround in India’s economy by mid-July `09 on the back of responses to various monetary policy measures by Reserve Bank of India.
According to Subir Gokarn, S&P chief economist, Asia-Pacific, the lag effects of earlier monetary tightening in 2008 coupled with a region-wide slowdown in exports and capital flows caused a sharp deterioration of corporate performances in Asia-Pacific economies in fourth-quarter 2008. This slowdown will continue into 2009, while strong policy responses provide some hope for 2010.
S&Ps has pegged India’s growth rate at 5.8 to 6.3% for 2009, while China is expected to grow in the range 5.8 to 7%. These forecasts are based on a baseline forecast of 2% decline during 2009 and a positive growth of 2% in 2010. But some of the large Asian economies like Japan, Singapore, Hong Kong Korea and Taiwan are likely to record negative growth in their economies. There is a pattern here, Gokarn pointed. These are the economies which have been dependent on exports. But China and India would benefit more because of the policy stimulus as also Indonesia because their domestic markets are fairly large.
According to Mr Gokarn, lags may vary depending on circumstances, but a period of about six months is not unreasonable. By this measure, and everything else remaining the same, we should have seen the first signs of the impact around September `09. Since the tightening continued until July or a bit after, we should expect its impact to persist until at least the first quarter of 2009. `When we look back at the region’s dynamics over the past several months, there is another possible explanation for the sharp dip in the fourth quarter of 2008. Inflation has receded so sharply in recent months that the focus has now shifted to the potential for deflation. Scarcely a few months ago—from about March to July 2008—inflation in the region was soaring to very uncomfortable levels.
Although inflation was driven by commodity prices—food, minerals and energy—central banks responded by tightening monetary policy. This was due to concerns about the persistence of price shocks and the inflationary spiral that they could trigger. For about five months, policy rates and liquidity ratios were steadily increased, even as news about the global financial system became increasingly negative. Inflation was seen as a more significant risk than recession.
Tata Steel, Corus ratings lowered
S&P's Ratings Services on Thursday lowered its long term corporate credit rating on Tata Steel to 'BB-' from 'BB', and on Corus to 'B+' from 'BB-', keeping the outlook for both ratings negative, reports Our Bureau from Mumbai. Corus' £3.67 billion senior secured debt was also lowered to 'BB', from 'BB+', and placed on CreditWatch with negative implications, Standard & Poor's said.
The Economic Times, February 06, 2009, Page 11
RBI Steps To Help In Recovery; India To Grow At 5.8-6.3% In ’09: Agency
Our Bureau MUMBAI
STANDARD & Poor’s sees a turnaround in India’s economy by mid-July `09 on the back of responses to various monetary policy measures by Reserve Bank of India.
According to Subir Gokarn, S&P chief economist, Asia-Pacific, the lag effects of earlier monetary tightening in 2008 coupled with a region-wide slowdown in exports and capital flows caused a sharp deterioration of corporate performances in Asia-Pacific economies in fourth-quarter 2008. This slowdown will continue into 2009, while strong policy responses provide some hope for 2010.
S&Ps has pegged India’s growth rate at 5.8 to 6.3% for 2009, while China is expected to grow in the range 5.8 to 7%. These forecasts are based on a baseline forecast of 2% decline during 2009 and a positive growth of 2% in 2010. But some of the large Asian economies like Japan, Singapore, Hong Kong Korea and Taiwan are likely to record negative growth in their economies. There is a pattern here, Gokarn pointed. These are the economies which have been dependent on exports. But China and India would benefit more because of the policy stimulus as also Indonesia because their domestic markets are fairly large.
According to Mr Gokarn, lags may vary depending on circumstances, but a period of about six months is not unreasonable. By this measure, and everything else remaining the same, we should have seen the first signs of the impact around September `09. Since the tightening continued until July or a bit after, we should expect its impact to persist until at least the first quarter of 2009. `When we look back at the region’s dynamics over the past several months, there is another possible explanation for the sharp dip in the fourth quarter of 2008. Inflation has receded so sharply in recent months that the focus has now shifted to the potential for deflation. Scarcely a few months ago—from about March to July 2008—inflation in the region was soaring to very uncomfortable levels.
Although inflation was driven by commodity prices—food, minerals and energy—central banks responded by tightening monetary policy. This was due to concerns about the persistence of price shocks and the inflationary spiral that they could trigger. For about five months, policy rates and liquidity ratios were steadily increased, even as news about the global financial system became increasingly negative. Inflation was seen as a more significant risk than recession.
Tata Steel, Corus ratings lowered
S&P's Ratings Services on Thursday lowered its long term corporate credit rating on Tata Steel to 'BB-' from 'BB', and on Corus to 'B+' from 'BB-', keeping the outlook for both ratings negative, reports Our Bureau from Mumbai. Corus' £3.67 billion senior secured debt was also lowered to 'BB', from 'BB+', and placed on CreditWatch with negative implications, Standard & Poor's said.
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