Newest trends in economic growth - what do they mean for you

 

Economists of various private entities say that the demand for products has been a bit low in the domestic and the global market. Differences between the US and China continue over trade, imposing tariffs on the products. 

Slump in demand

In FY19, the Index of Industrial Production (IIP), an amount based measure, raised to 3.6%. Various indicators like vehicle sales, train and airfares, petroleum goods and other goods, showed a decreased consumption, though the inflation was low. Sales of passenger vehicles saw the slowest growth period of 5 years, meager 2.7%.

One factor of low demands can be the decrease in government spending to meet the financial deficiency target of 3.4% of GDP. Public spending and utilization were good in the midst of feeble private demands.

Public spending and consumption had been propping up growth amid weak private investment and exports. Many banks estimate the fourth quarter growth to be 6% approximately.

Nonbanking Finance Companies (NBFCs) and Infrastructure Leasing & Financial Services (IL&FS) faced a decline in demand and are one of the factors of slow growth, experts think.

Slash in Rates

SBI expects a keener rate cut, 35-50 Base Point Rate (BPS) in the imminent arrangement. "Curiously, RBI out of the blue could utilize the rate change in non-multiples of 25 BPS as an initial move towards giving second-age sign to market of future approach position," said SBI in a note.

Seeing the trends in economic growth, the RBI anticipates that India's economy should grow to 7.4% in FY19. It has moved its concentration from inflationary worries to keeping up development force.

Benefit for investors

Investors can reap multiple benefits from the slow market. When the market will eventually rise, investors will get good returns. Also, if the investment is done in stock market instrument then returns will be more as the market will rise and while selling more money will be made. It is a win-win situation for the investor.

As the Indian economy will rise to the expected growth rate in the coming time, investors can build their wealth with the growing economy, especially by investing in market-linked plans like ULIPs.

Reference - https://economictimes.indiatimes.com/news/economy/indicators/economic-growth-may-have-slipped-below-7-in-fy19-lowest-in-5-years-et-poll/articleshow/69551246.cms

 

ARN: ED/07/19/14707