1 India Economic Overview (continued)
1.1 India and Global Economy Linkages
India and the rest of emerging Asia have been projected to continue to witness steady growth; however some countries
might face strong headwinds from China¡¯s economic rebalance and global manufacturing weakness. IMF¡¯s World Economic
Outlook (WEO) update in January 2016 downgraded the growth in Developing and Emerging Asia to 6.3%
2
for FY15/16
from 6.6% in FY14/15 due to the slowing Chinese economy, weak external demand and low commodity prices. IMF has
also marginally revised GDP growth of China to 6.3%
2
in FY16/17 and 6.0%
2
in FY17/18, primarily due to weak investor
sentiment as the economy is moving towards becoming a consumer driven market. China¡¯s GDP growth fell to a six year low
of 6.9% in Q3 FY15/16, but further reforms and stimulus packages are likely to contain the decline in the coming quarters.
As per the WEO update in January 2016, the slowdown in the Chinese economy along with declining commodity prices
are expected to impact emerging economies, reflecting in the coming year¡¯s growth prospects. However, IMF reiterated
that India and the rest of emerging Asia are expected to record robust growth rates in the coming years. India¡¯s growth
forecasts were given as 7.6% in FY15/16 and 7.5%
2
in FY16/17. Global growth rates were also marginally revised to 3.1%
2
in FY15/16 and 3.4%
2
in FY16/17.
Despite the slow global economic growth, India¡¯s exports sector reached approximately US$196.9 billion ( 12,699 billion)
3
in FY15/16 (till December 2015). As per World Trade Organization (WTO) report 2015, India is the 19
th
largest merchandise
exporter with a share of 1.7% and 12
th
largest importer with a share of 2.4% of world trade. An important factor contributing
to the growth in trade has been the periodic rounds of successful multilateral and bilateral trade negotiations which have
led to a considerable reduction in tariffs on goods crossing national borders. India has recently concluded Free Trade
Agreement with countries such as Finland, Nepal, Africa, and Chile and has also entered into an agreement as SAARC
preferential trading arrangement. India¡¯s major trading partners are EU, China, USA and the United Arab Emirates (UAE),
even as the Government is also shifting focus on African and Latin American markets. Petroleum products, gems and
jewellery, engineering goods and chemical and its related products are amongst the major commodities of the country¡¯s
foreign trade.
Despite the current economic turbulence impacting both established and emerging economies, India is considered to
be amongst one of the most promising economies in the world, primarily due to consumer centric growth initiatives,
infrastructure investments and a good mix of manufacturing, agriculture and services sector. The urban population in
India is expected to grow from 340 million (30% of total population) in 2008 to 590 million (40% of total population) in
2030. As a consequence of urbanisation, more and more households are emerging with increased purchasing power and
a heightened desire towards consumerism. Consequently, the per capita income (at constant prices) rose from US$1,259
( 83,422) in FY14/15 to US$1,333 ( 88,315) in FY15/16, displaying an increment of 6%.
1.2 Current Account Deficit
The Current Account Deficit (CAD) is estimated to be 1.2%
4
of GDP for FY15/16 and is projected to be 1.5% of GDP for
FY16/17. This compares with a CAD of 1.3%
4
of GDP for FY14/15. Key influencing factors include contraction in trade deficit,
marginal improvement in net services, reduction in global oil prices and consolidation of fiscal deficit. The resultant impact
of reduction in current account deficit would potentially result in an increase of India¡¯s forex reserves. This is expected to
favourably impact the Rupee, making it appreciate against US Dollar and help stabilise the currency fluctuation.
3
Source: Department of Commerce
4
Source: Reserve Bank of India (RBI)
A
INDIA Economic and Commercial Real
Estate Overview
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ASCENDAS india trust ANNUAL REPORT
2015/2016
