Economic recovery weakens due to slowdown in consumer sector: BluFin

Economic recovery

The economic recovery is "tepid" in December due to slowdown in consumer sector and weak global economic environment, a report has said.

The BluFin Business Cycle Indicator (BCI), that reflects various macroeconomic trends on a monthly basis, was marginally down at 159.7 in December against 160 in November.

The weakness is primarily due to global economic recession affecting country's foreign trade and slowdown in the domestic consumer sector, while production of basic and intermediate economic goods continues to improve, BluFin, a financial information and content provider, said.

"Current data at the component level suggests that the sluggish recovery is primarily a function of the global economic recession affecting India's foreign trade as well as a slowdown in the domestic consumer sector," the report said.

"The major positive contributors continue the basic and intermediate sectors. The policy reforms initiated by the government should be addressing weaknesses in the future; they are yet to have any significant impact on current trends, it added.

However, implied the year-on-year growth rate was positive at three per cent suggesting the Indian economy is growing at a better rate than the previous year.

"India's recovery remains tepid primarily due to global weakness. It is important that fiscal reforms be implemented reasonably soon to act as an antidote to the weakness abroad," BluFin Director Sam Thomas said.

BluFin Vice-President (Research and Development) Debopam Chaudhuri said," the BCI trend over the last few months has been suggesting a bottoming out in the current business cycle of the Indian economy. However, the suppressed year-on-year growth in this Indicator signifies that the path to recovery would be very slow."

The latest BCI, which is designed to ascertain turns in the business cycle, takes into account five broad areas -- capital markets, foreign trade, policy, real economy and survey.

Going by December readings, there has been improvement in electricity production, revenues from freight earned by railways, and production of key metals such as iron and aluminum.

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