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India Economy Stabilizes in November as Retail Demand Improves – BNN

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(Bloomberg) — India’s economic activity showed signs of stabilizing in November, even as concerns of fresh virus outbreaks and a new strain in the U.K. mount amid news of vaccines fueling hope.

All eight high-frequency indicators tracked by Bloomberg News were steady last month, keeping the needle on a dial measuring the so-called ‘Animal Spirits’ unchanged at 5. The level was arrived at by using the three-month weighted average to smooth out volatility in the single-month readings.

The pace of activity thus far was enough for the nation’s central bank to revise its forecast for the economy, which it now expects to exit a recession in the current quarter to December.

Business Activity

Activity in India’s dominant services sector expanded for a second straight month in November, although at a slower pace. The Markit India Services Purchasing Managers’ Index was at 53.7 last month versus 54.1 in October, with a reading above 50 indicating expansion. IHS Markit, which conducts the survey, said the level of positive sentiment had climbed to the highest since February amid predictions that conditions would normalize once a vaccine is rolled out.

Manufacturing activity lost some of the momentum seen in the past few months, and as a result caused the composite index to drop to 56.3 in November from 58 a month earlier. Both manufacturing and services sectors witnessed broad price pressures, a factor that is likely to keep the inflation-targeting central bank from resuming interest-rate cuts in a hurry.

Exports

Exports lost some momentum last month, declining 8.7% in November from a year ago as trading partners were hit with fresh restrictions amid a second wave of Covid-19 infections. Gems and jewelery and engineering goods exports were a drag, although a deeper fall was arrested by healthier shipments of drugs and pharmaceuticals along with farm products. Imports were weak, with demand for capital goods still subdued and remains a possible cause for worry.

Consumer Activity

Passenger vehicle sales, a key indicator of demand, rose 4.7% in November from a year ago, although the pace was slower than what was seen in the run up to India’s festival of lights — Diwali. Overall retail sales signaled demand picking up, even though they were 44% below the year-ago level, according to ShopperTrak.

Demand for loans picked up from lows seen in October. Central bank data showed credit grew at more than 5.5% in November from a year earlier, higher than the 5.1% growth seen in the second half of the previous month. Liquidity conditions were broadly stable last month.

Industrial Activity

Industrial production rose 3.6% in October from a year earlier. Production of capital goods, which had declined for several months in a row, rose 3.3% from a year earlier, and so did consumer durables and non-durables.

Output at infrastructure industries shrank 2.5% in October from a year ago. The sector, which makes up 40% of the industrial production index, had contracted by a record 37.9% in April. Both data are published with a one-month lag.

©2020 Bloomberg L.P.

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German economy to stagnate in Q1 – economist – TheChronicleHerald.ca

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BERLIN (Reuters) – The German economy will stagnate in the first quarter of the year, Ifo economist Klaus Wohlrabe said on Monday, in the latest sign of the toll being taken by lockdown on Europe’s largest economy.

“The German economy is starting the year with little confidence,” Wohlrabe said, adding that delays in COVID-19 vaccine deliveries were adding to the uncertainty.

German business morale fell by more than expected in January as a second wave of COVID-19 brought to a halt a recovery in Europe’s largest economy, a survey showed on Monday.

(Reporting by Rene Wagner; Writing by Riham Alkousaa; Editing by Thomas Escritt)

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Kenya's Economy Seen Growing This Year After Dodging Shrinkage – BNN

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(Bloomberg) —

Kenya’s economy is expected to expand this year as activity resumes following Covid-19 lockdowns, boosting tax revenue and government spending.

East Africa’s largest economy is projected to grow by 6.4% this year and slow to 5.5% in 2022, with scheduled elections seen dampening activity, Treasury said in a report on its website. The economy is estimated to have expanded 0.6% last year.

“There has been an improvement in economic activity in the third and fourth quarters of 2020, albeit at a slow pace, following reopening of the economic, but pickup is weak,” according to the Treasury’s budget policy statement. The economy contracted by 5.7% in the second quarter of 2020, after growing 4.9% in the previous three months.

Other Highlights:

  • The finance ministry expects government spending to rise by 3.2% to 2.968 trillion shillings ($27 billion) in the fiscal year starting in July. The fiscal deficit is seen at 7.5% of GDP, narrowing from an estimated 9% in the current fiscal year.
  • The financing gap in the coming year will be plugged by net external financing of 345.5 billion shillings, or 2.8% of GDP, and net domestic borrowing of 592.2 billion shillings, equivalent to 4.7% GDP.
  • While the economic shock from the Covid-19 pandemic has worsened Kenya’s debt indicators, the government is optimistic that the economy will recover and the debt position will improve.
  • “Kenya faces a fiscal risk as the shilling continues to depreciate due to the fact that 51% of the debt is held in external currencies. This has led to increase in debt service budget in local currency and also increase on the stock of debt without inflows.”
  • Lending to the private sector grew by 8.1% in the 12 months to November, it said.

©2021 Bloomberg L.P.

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Economy

Kenya's Economy Seen Growing This Year After Dodging Shrinkage – BNN

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(Bloomberg) —

Kenya’s economy is expected to expand this year as activity resumes following Covid-19 lockdowns, boosting tax revenue and government spending.

East Africa’s largest economy is projected to grow by 6.4% this year and slow to 5.5% in 2022, with scheduled elections seen dampening activity, Treasury said in a report on its website. The economy is estimated to have expanded 0.6% last year.

“There has been an improvement in economic activity in the third and fourth quarters of 2020, albeit at a slow pace, following reopening of the economic, but pickup is weak,” according to the Treasury’s budget policy statement. The economy contracted by 5.7% in the second quarter of 2020, after growing 4.9% in the previous three months.

Other Highlights:

  • The finance ministry expects government spending to rise by 3.2% to 2.968 trillion shillings ($27 billion) in the fiscal year starting in July. The fiscal deficit is seen at 7.5% of GDP, narrowing from an estimated 9% in the current fiscal year.
  • The financing gap in the coming year will be plugged by net external financing of 345.5 billion shillings, or 2.8% of GDP, and net domestic borrowing of 592.2 billion shillings, equivalent to 4.7% GDP.
  • While the economic shock from the Covid-19 pandemic has worsened Kenya’s debt indicators, the government is optimistic that the economy will recover and the debt position will improve.
  • “Kenya faces a fiscal risk as the shilling continues to depreciate due to the fact that 51% of the debt is held in external currencies. This has led to increase in debt service budget in local currency and also increase on the stock of debt without inflows.”
  • Lending to the private sector grew by 8.1% in the 12 months to November, it said.

©2021 Bloomberg L.P.

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