Acuité Ratings & Research Limited

India’s core sector growth improved to 4.3% YoY in Nov’24 from 3.7% YoY in Oct’24. This marked the third consecutive month of growth in core output, after the unexpected contraction of -1.4% in Aug’24. Except for crude oil and natural gas, all the other six segments recorded a moderate or healthy growth on an annualized basis. The cement industry led the way with a strong 13% growth.   Says Suman Chowdhury, Chief Economist and Executive Director, Acuité Ratings & Research Limited: “Core sector growth has strengthened mildly in Nov'24, reflecting a gradual recovery in industrial activity in the second half of the fiscal. Cement emerges as the standout performer, on expectations of increased construction activity supported by a ramp up of government capital expenditure. Of the remaining 7 sectors, 5 sectors posted positive YoY growth, with Fertilizers and Electricity printing higher annualized growth than the previous month. Coal and steel sector largely maintained a healthy growth. However, weaker growth in refinery output and the continuing weakness in Crude Oil and Natural Gas output, continues to be a constraint for overall core sector activity.    Given the base factor, the growth in core sector is set to moderate in the current fiscal but we expect it to improve to 4.5%-5.0% from the 4.2% YoY print seen in the Apr-Oct’24 period. The anticipated surge in capital expenditure will support a strong growth in the construction sector, thereby pushing up core sector and industrial output in the remaining months of the fiscal.” Download the report here: https://lnkd.in/dv-nwyTt Sankar Chakraborti #economy #acuite #coresector

In our final edition of Macro Pulse in 2024, our Executive Director & Chief Economist, Suman Chowdhury shares the key developments in 2024 and the economic outlook for 2025: ▪️ 2024 was clearly positive from a political stability perspective with the ruling party and its allies getting re-elected in June and also retaining control over most of the states which went for polls in the year. ▪️ Real GDP growth slowed down to 6.6% in Jun’24 quarter and then, unexpectedly to 5.4% in the Sep’24 quarter. This made us revise our FY25 GDP growth forecasts to 6.4% from the original 7.0%. ▪️ Some of the factors behind the slowdown were the impact of incessant rains in certain parts of the country, a material delay in government capital expenditure, and a fallout of the elections. ▪️ Higher interest rates and the regulatory tightening in retail loans did have some impact on urban consumer demand. The rural engine of the economy though has been a better performer, and the agricultural sector is poised for 3%+ growth in FY25. ▪️ While the headline CPI inflation dropped below 4% in Jul-Aug’24, it saw a resurgence due to excess rains and high vegetable prices. But the good news is that vegetable prices are finally on the decline, and this should help in headline inflation coming closer to 4.5% over the next few months. ▪️ With the growth slowdown and the expected moderation in inflation, there is a high likelihood of the much-awaited rate cut in Feb’25. Nevertheless, it’s still not an easy decision for the RBI given the severe headwinds on the external front - a resilient US economy, a stronger USD and expectation of a combative tariff policy from the new US administration, leading to significant capital outflows and a pressure on the INR which has breached the 86 level. ▪️ Despite the disappointments, the funding environment in the domestic capital market continues to be favourable, with the likelihood of a steady pickup in investments by the private sector in 2025. We estimate GDP growth to recover to around 6.8% in the second half of FY25. ▪️ Economic reforms will be necessary to enhance employment levels and boost domestic demand, key to 7.0%+ growth over the medium to long term. We look forward to some of these reform measures in the upcoming Union Budget.    Download the Dec’2024 edition of Acuité Macro Pulse here: https://lnkd.in/d-CtEJgk Sankar Chakraborti   #economy #India #macroeconomics

Acuité Group wishes everyone the best of health and prosperity in 2025!   Catch a glimpse of Suman Chowdhury, our Executive Director and Chief Economist, as he summarises the key developments in 2024 and shares our economic outlook for 2025. ESG Risk Assessments & Insights | SMERA Ratings Sankar Chakraborti #newyear #economy #outlook

India’s current account deficit (CAD) narrowed marginally to 1.2% of GDP (USD 11.2 bn) in Q2 FY25 from 1.3% in Q2 FY24 (USD 11.3 bn). Total capital flows swelled to a 5-quarter high of 3.3% of GDP (USD 30.5 bn) during Q2 FY25 vis-à-vis 1.5% (USD 12.8 bn) in the corresponding quarter of FY24. The net balance of payment recorded a surplus position of 2.0% of GDP (USD 18.6 bn) in Q2 FY25, up sharply from 0.3% (USD 2.5 bn) in Q2 FY24.    But the external position seems to have changed dramatically in Q3FY24 and particularly in Dec’24.   Says Suman Chowdhury, Chief Economist and Executive Director, @Acuité Ratings & Research: “The stability of the INR has been challenged by the new normal in the global landscape, marked by the incoming new US administration, risks of a global tariff war, stronger than expected US economy, and lower than expected rate cuts by Fed in 2025 (confirmed in the latest Fed meeting). All these have translated to capital outflows from emerging economies and a resurgence of the US dollar. Additionally, India’s trade deficits have also been higher than expected due to the surge in gold imports (albeit there is some confusion on the data) and a lack of consistency in the export trajectory.    While the INR has seen relatively less depreciation in the current calendar year compared to most other currencies, it has been actively supported by RBI’s intervention in the market, leading to a decline in the central bank’s forex reserves in the last 3 months. While our forecasts on CAD stands at 1.2% for FY25 and of INR at 85.5 as in Mar'25 end, there are visible downside risks.   Calendar 2025 can be a real test not only for India's external resilience but also for RBI's monetary policy decisions.”    Read our comprehensive analysis here: https://lnkd.in/dSYKVpMP    Sankar Chakraborti #India #Economy #BOP #GDP

"Our latest Macro Heat Map offers a peek into the emerging economic landscape in the second half of the current fiscal. The slowdown which led to a disappointing 5.4% GDP growth in the second quarter of the fiscal, seems to have been partly carried forward to the third quarter of the year. Industrial growth has remained tepid in the month of Oct’24, reflecting the absence of a robust broad-based demand in the economy. However, agriculture and rural demand, supported by a good monsoon remains in the green zone, as visible in the tractor and two-wheeler sales. Food inflation, nevertheless, is yet to catch up to the seasonal downward trend, prompting economists to revise their near-term inflation forecasts and persuading RBI to postpone the decision on rate cuts.   Amidst such domestic challenges, the global headwinds have also risen with a resilient US economy, a stronger USD and expectation of aggressive tariffs from the upcoming new US administration – all of which is leading to significant capital outflows from India and a pressure on the INR. The resilience of India’s external position has also been threatened by the slowdown in exports and a climbing trade deficit. On the other hand, the public capital markets continue to be active, facilitating fund raising by a wide spectrum of businesses and a steady pickup in investments by the private sector.   We estimate GDP growth to improve to 6.7% and 7.0% respectively in Q3 and Q4, primarily driven by higher agricultural growth and a sharp pickup in public capital expenditure. A sustained domestic demand revival, however, will be the key to 7.0%+ growth over the medium term." Says Suman Chowdhury, Executive Director and Chief Economist at Acuité Ratings & Research Limited. Sankar Chakraborti #MacroHeatMap #GDP #Economy

Acuité group wishes you and your loved ones merry festivities and a happy new year! Acuité Ratings & Research Limited | SMERA Ratings | ESG Risk Assessments & Insights #christmas #holidays #festivities

India’s total external trade (merchandise and services) deficit widened sharply to a record high of USD 19.9 bn in Nov'24 from USD 10.0 bn in Oct'24. This was on account of a sharp surge in the merchandise trade deficit to a record high level of USD 37.8 bn in Nov'24 (up from USD 27.1 bn in Oct'24).Despite the services trade surplus recording a monthly high of USD 18.0 bn in Nov'24 (up from USD 17.1 bn in Oct'24), it wasn’t enough to offset the overwhelming drag from the merchandise trade deficit.    Says Suman Chowdhury, Chief Economist and Executive Director, Acuité Ratings & Research Limited: “The resilience in India’s external position witnessed in the post Covid period has started to witness headwinds due to the new normal in the global landscape which is marked by a new US administration, risks of a global tariff war, stronger than expected US economy and lower than expected rate cuts by Fed in 2025 – all of which have translated to capital outflows from emerging economies and a resurgence of the US dollar. India’s trade deficits have also been higher than expected due to the surge in gold imports and a lack of consistency in the exports trajectory, the latter partly due to the volatility in petroleum exports.   While the INR has seen relatively less depreciation in the current calendar year compared to most other currencies, it has been actively supported by RBI’s intervention in the market which has also led to a decline in the central bank’s forex reserves in the last 3 months. We continue to expect a higher CAD of 1.2% in FY25 and have an INR forecast of 85.5 as of March 2025.”    Download our detailed analysis here: https://lnkd.in/dCST34UB    Sankar Chakraborti #trade #India #economy

India’s industrial activity clocked a mild improvement with an annualized growth print of 3.5% in Oct'24 vs. 3.1% in Sep'24.    Says Suman Chowdhury, Chief Economist and Executive Director, Acuité Ratings & Research Limited: “Industrial production in October 2024 showed a slight improvement from September, with moderate upticks in all sectors, manufacturing, mining as well as electricity. However, growth is much slower than in October 2023, which saw an uptick of 11.9% and highlights the impact of the base factor. The use-based classification also shows positive growth, with consumer durables dipping slightly compared to last month (5.9% vs 6.5%) but still leading growth alongside infrastructure goods (4.0%).For the April-Oct 2024 period, industrial output grew by 4.0%, albeit materially weaker than the 7.0% growth seen during the same period.    We expect IIP growth to pick up in H2FY25 on the back of an improvement in consumer demand, supported by the wedding season and the kharif harvest. Further, government spending particularly on capital expenditure is also likely to see a rapid uptick over the next few months. Nevertheless, the annualized growth in IIP for FY25 is set to slow down to around 4.5% given the weaker growth in H1.”   Download our comprehensive analysis here: https://lnkd.in/d-UtgTBx    Sankar Chakraborti #IIP #economy #India

India’s CPI inflation moderated to 5.48% YoY in Nov'24 from a 14-month high of 6.21% in Oct'24. The deceleration in the headline inflation print is in line with market consensus expectation of approximately 5.5%.   Says Suman Chowdhury, Chief Economist and Executive Director, Acuité Ratings & Research Limited: “India's retail inflation appears to be stabilizing in the third quarter of the current fiscal with the Nov print at 5.48%, in line with our forecasts and offering some respite after the surge to 6.2% seen in October. The primary driver is a significant moderation in food prices (which nevertheless noted an 8.2% increase), particularly vegetables. After recording a staggering 42% YoY increase in October, vegetable price inflation is estimated to have declined to ~30% in November, with tomato prices leading this downward trend. Additionally, fuel prices continue to be in a contractionary mode, easing pressures on both household budgets and operating costs for businesses. We expect further relief in food inflation with the arrival of the Kharif crop in late November to December.   Core CPI inflation at 3.9% in Nov'24 has largely remained stable, supporting the stabilization of the headline inflation. This comes as good news for the new RBI Governor, who may have to shift focus towards economic growth which has shown signs of a slowdown in Q2FY25. If the headline print continues its downward trend towards 4.5% in the next 3 months, it could offer the central bank greater confidence to deliver its first rate cut in Feb 2025.”    Download the complete report here: https://lnkd.in/drkRgU86   Sankar Chakraborti #inflation #economy #indiacpi

#HiringAlert We are hiring for the below-mentioned position. Interested candidates are requested to share their CVs at career@acuite.in Sr. Rating Analyst / AVP - Analytical Operations (Financial Sector) Work Exp: 4-5 Yrs Location: Mumbai Qualification: CA/ MBA/ CFA Sankar Chakraborti | Suman Chowdhury #career #creditrating #India