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Economic Outlook Macro-economic forecasts and insights
Real-time analysis of data releases and copious Indicator data

06 Oct 2017 6:17 PM, Insights Janaki Samant

Observations of Monetary Policy Committee,RBI

Fourth Bi-monthly Monetary Policy Statement


Rates Policy repo rate kept unchanged at 6.0 per cent.  
Advanced economies Global economic activity strengthened. US, EU and Japan have continued to grow at a strong pace or have maintained economic recovery.  
Emerging markets China, Brazil and Russia recorded strong growth in the September 2017 quarter.  
Global trade Significant improvement in global trade in 2017 compared to the lacklustre growth in 2016.  
Financial markets Equity markets in most AEs continued to rise. Equities in EMEs also gained. In the currency markets, US dollar weakened in September 2017.  
Capital flows to EMEs Appear increasingly vulnerable to the normalisation of monetary policy by the US Fed.  
April-June 2017 growth GVA growth slowed to 5.7 per cent. Front-loading of central government expenditure contained the slowdown. Industrial growth decelerated sharply. Growth in agriculture also slackened. Services sector improved.  
Monsoon & Agriculture Southwest monsoon lost momentum from mid-July to August, the crucial kharif sowing period. Rainfall during June-September 2017 was deficient by around five per cent. 17 per cent of the geographical area received deficient rainfall. Live storage in reservoirs fell to 66 per cent of the full capacity as compared with 74 per cent a year ago. The first advance estimates by the Ministry of Agriculture point to a decline in kharif production.  
Industry IIP rose by 1.2 per cent y-o-y in July 2017 after contracting 0.2 per cent in June. Manufacturing growth remained weak. In August 2017, core industries grew by 4.9 per cent led by a pick-up in coal production and electricity generation. Manufacturing PMI expanded in August and September 2017.  
Services Performance of various services sectors remained mixed. Sales of commercial & passenger vehicles, two and three wheelers, railway freight traffic and international air passenger traffic recorded an increase. However, cement production, cargo handled at major ports, domestic air freight and passenger traffic showed weak performance.  
Inflation CPI inflation rose to 3.36 per cent in August 2017. Food inflation rebounded in July and August after a decline in prices in June. CPI inflation excluding food and fuel also increased sharply in July and further in August.  
Liquidity Surplus liquidity in the system persisted in September 2017 quarter.   
Foreign trade Merchandise export growth picked up in August 2017 after decelerating in the preceding three months. Growth in imports remained in double-digits for the eighth successive month in August.