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India’s Economy Is Slowing

Written by Gary North on February 2, 2015

As always, the Keynesians want lower interest rates on short-term loans. Rates are lower than they have been since the 1930’s, but this is not low enough for Keynesians. They want more central bank inflation to force down rates. They think another fraction of a percentage point cut will get the world’s economy growing strongly again. It won’t.

What will central banks do when the economies move into recession, which they surely will?

– Growth in India’s factory activity slipped in January from December’s two-year high as new orders rose at a weaker rate despite factories keeping price increases to a minimum, a business survey showed on Monday.

Cooling growth and inflation could give the Reserve Bank of India reason to cut interest rates again in the coming months but any move may depend on the government’s annual budget due on Feb. 28.

The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, fell to a three-month low of 52.9 in January from December’s two-year high of 54.5.

It has been above the 50 level, which denotes growth, since November 2013 but missed poll expectations for a smaller drop in January, to 53.5.

“Sluggish growth and falling inflation further reinforces our view that the RBI should deliver upfront rate cuts,” said Pranjul Bhandari, chief India economist at HSBC.

Continue Reading on in.reuters.com

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