Economy under pressure

UBS says India’s Economy Growth May Come Under Pressure


Economy under pressure www.purnartha.comIndia’s economic growth may come under pressure in the near term, said Paul Donovan, global economist, UBS Investment Bank, as agriculture output is expected to remain low due to El Nino impact. India’s model for manufacturing, which is based on China, is not very impressive as globally there is going to be a transformation in the labour force from semi-skilled and skilled to highly skilled labour for manufacturing value-added products. We expect global economic growth somewhere between 3.25-3.50 per cent this year.
However, beneath this headline number we see considerable divergence with US and Europe growing at better pace, while Asian and Chinese economies gradually slow down. The US economy is likely to grow at 2.8 per cent driven by consumer spending. We see gradual increase in wages as the labour market in the US is currently tight for skilled and semi-skilled labour, which constitute 70 per cent of US labour market, he added.