Reasons for BRIC’s slowdown

BRIC stands for the group of countries- BRAZIL, RUSSIA, INDIA, CHINA.

After four times faster growth of BRIC in the past decade compared to the America’s, now they are slowing down with no hopes of surging up in the next few years. This year BRIC recorded $15 billions of outflow and BRIC indexes may fall another 20% next year, buffeted by the liquidity squeeze stemming from Europe's sovereign debt crisis. Few main reasons for this slowdown are-

• Higher Wages
• Higher Interest Rates
• Currency Volatility

This is again confined to the lowered GDPs in these countries due to less supply of workers to the production. Average economic growth in the BRIC countries will decelerate to 6.1% next year from a high of 9.7% in 2007, according to September estimates by the International Monetary Fund.

(Courtesy- The Economic Times, 29th Dec.2011)

Story of Rupee...!!!

The year 2011 started with a stable rupee. The outlook seemed positive with steady capital flows. At times when inflows were dull, it was mainly due to apprehensions in the market about capital controls.

Things were going fine for the rupee for most part of the year, though globally there was uncertainty about the economic fundamentals of advanced economies.

However, things took a turn for the worse in the currency markets after global ratings firm Standard and Poor's downgraded the US Sovereignty outlook. The rupee started weakening against the dollar steadily as dollar flows slowed down. Foreign portfolio inflows between April and October this year amounted to a mere $ 922 million compared to $ 27 million in the same period a year ago.

The rupee has slipped almost 18% since the US sovereign downgrade. RBI largely remained on the sidelines for a long time, with the top brass defending its inaction, attributing the rupee's slide to global developments. It sold just about $1.8 billion during September and October.
The central bank acted only towards late November, announcing measures to encourage dollar inflows, like relaxing caps on interest rates on NRI deposits and asking ECB proceeds for local expenditure to be brought home immediately. In early December it totally curbed rebooking of cancelled forward contracts. The last time such harsh steps were taken was in late 1997, when the rupee fell sharply against the dollar in response to the movement of other Asian currencies.
The rupee had performed better than most other Asian currencies then.
However, this time round the rupee is the worse performer. Its external sector fundamentals are weaker.
India is perhaps the only economy among its Asian peers to have a current account deficit, and it could widen further due to high crude and commodity prices.

(Courtesy- The Economic Times, 28th Dec. 2011)

Foreign Fashion Retailers wooeing in India...

With a slowdown in the US and European economies, foreign brands are now setting their eyes on the lucrative Indian market with an investment of over $90 million. Paris-based luxury goods group Louis Vuitton Moet Hennessy (LVMH), Danish fashion house Bestseller with 4 brands, DLF Retail and Reliance Brands (a unit of Reliance Retail), Swedish fashion retailer Hennes & Mauritz, American high street casual wear brand Brooks Brothers, Italian luxury apparel player Emilo Pucci and many others are looking for strategic alliances with each other and new starts in India. These retailers are targeting the major cities in India like Delhi, Mumbai, Ahmedabad, Chennai, Kolkata, Bengaluru, Lucknow and Ludhiana.

While India was a promising market to many international brands, it was not completely immune to the global economic flu. More than its primary impact on the economy, it sobered the mood in the consumer market. Even the core target group for international brands, that had just begun to splurge, apparently without guilt, tightened the purse strings and either down-traded or postponed their purchases. Hence its essential for these Retailers to position themselves in a rational way to alert Indian consumers.

(Courtesy- The Financial Express & Images Fashion.com)

Smart Baaniya Vs Aam Aadmi...

    Where a huge dispute is going on for FDI in Retail Industry in India, a Baniya is still using its smartness in looting the Aam Aadmi. The 50 million traders on strike last week exceeded India's entire organized labour (around 30 million). Shopkeepers simply cannot be called unorganized or poor. In my local market, shopkeepers say that even the smallest shops are worth a crore. Today the unorganized Retail Sector is continuously saying that their business will come to an end due price-offs by Global Ratailers, but no one says we will improve our services and offer low prices to the common man so that he can get rid off the inflation. Dominated by banias, some of the small shopkeepers are notorious for cheating customers through adulteration and fiddled weighing scales. They are also notorious for evading sales tax and income tax. The politicians who oppose foreign retailers are promoting the Bania against the Aam Aadmi. Because politicians always woo vote banks and financiers. Banias constitute a highly organized vote bank (totaling 50 million in last week's bandh).

         In today's situation when India has the fiscal deficit of around 74% and Aam Aadmi is getting grilled in inflation, Retail FDI becomes the most important issue to cope up this situation. So, Baniya need not to worry, they have even better opportunities to improve themselves and being competitive.

Sales Stumbling In China, India

New-vehicle sale in two of the worlds most recently consistant growth markets,china and india,are slowly as markets incentives recede and the drag of the worlds economy finally may be hitting.bloomberg reported today that october sales in china hits their slowest growth rate in 5 months after the phase out in two years government vehicle purchase inducement and the cost of auto loans increased.wholeseller deliveries in china increased just 1.4% in october,the slowest rate since may,and many automakers are resorting to increase incentives to stoke demand.

Indian Economy- Still the topic of concern...

Second quarter results of the current fiscal year have shown that Indian Economy is still under clouds of questions..??? Is it really growing..?? Is the common man going to sleep with no tension on his mind...???
Answer lies in these facts-

• Current GDP- 6.9%, lowest since the first quarter of the fiscal year 2010-2011
• Annual growth rate of the Core Sector- 0.1%
• Fiscal deficit for the budget of 2011- 74.4% (Courtesy- The Economic Times)

These facts clearly show where are we moving..!!!

The Services sector has been proven to be the only highly growing sector. The Indian policymakers are now seen keen on this issue. The Retail FDI issue is the one of the step towards fastening the economic growth. 

The high inflation rate and poor performances by the core sectors of economy are needed to be looked carefully.