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India's manufacturing industry fell below the 'recession' range for the first time
While the global market was in turmoil last year, India unexpectedly grew into a major economy that bucked the trend. However, this once quite dazzling 'BRIC' has to face the embarrassment of fading - recently, following the footsteps of other emerging market economies, India's manufacturing industry has experienced a clear downward trend. This makes people worry that the continued decline in the manufacturing operation in emerging markets may have an impact on the growth of the global industry. For the first time, the financial information service company Markit and the Nikkei index jointly announced on the 4th that in December 2015, India's manufacturing PMI fell from 50.3 in November to 49.1, a new low since August 2013, two years For the first time in many years, it fell below 50, the watershed between prosperity and decline, and fell into a negative area representing the contraction of manufacturing activities, and the contraction was the largest in nearly seven years, which reflected the deterioration of the overall business situation of India's manufacturing industry. Markit economist Pollyna de Lima would have a heavier debt load and therefore higher import costs. This can be seen from the fact that both the purchase price and the ex-factory price in the PMI sub-item data have risen. In addition, according to the PMI index released this time, the number of new orders in India fell sharply last month, which also affected the output of India's manufacturing industry. In this regard, Lima said that although from another perspective, under the influence of the Fed's interest rate hike, the demand for the Indian rupee for the US dollar has also weakened further. India's PMI data underscores the difficulty for the Indian government to boost private investment against the backdrop of a weaker global economic outlook. At present, the turmoil in the global stock market and currency market has a considerable impact on India. India has cut its benchmark interest rate four times last year and introduced a lower inflation target to control the long-standing price volatility. These economic stimulus policies are Measures taken by the Indian government to appease panicked investors. The embarrassment of 'conceited' India Last year, Indian Finance Minister Arun Jaitley said with 'lofty ambitions' that India may become a 'heroine in troubled times' and even grow into a global growth driver. However, recent figures have slapped the finance minister in the face. Last month, the Indian government lowered its economic growth forecast for fiscal 2015 to 7%-7.5% from the previous 8.1%-8.5%. At the same time, the Indian government also stated that the country's economic growth prospects are extremely challenging. If reforms are not effective, the economic growth rate in fiscal 2016 will be much lower than last year. It is understood that in the first half of 2015, India's nominal GDP growth has slowed down significantly, from 13.5% to 7.4%. Slower economic growth in turn weighs on fiscal deficit-to-GDP target of 3.9% and tax revenue - lower-than-expected GDP growth has boosted fiscal deficit-to-GDP ratio by 0.2%, raising debt-to-GDP ratios for nearly 12 years The ongoing downward trend has been reversed, with major implications for the stability of the Indian economy and its response to external risks. And it's not the first time that India has suffered 'conceit' after the fact. In the face of India's rising economic status, the British government has completely stopped providing economic assistance to India since January 1 this year. The initial cause was that in 2012, Pranab Mukherjee, then the Minister of Economy of India, made a statement that 'British aid to India is not worth mentioning in the country's development'. After Mukherjee's speech, the British people protested against the British government's economic aid to India, which has a strong space and defense program. Since then, the British government has decided to gradually reduce economic aid to India. This year, when the UK's economic aid is completely withdrawn from its support for India's economic development, India's already uncertain economic situation may face more variables. In addition, India also faces multiple obstacles of its own, of which infrastructure problems are particularly serious. Currently, India lacks not only ports, road and rail to transport goods, but also a reliable energy supply to keep factories running, leaving the country without an ecosystem for competitive suppliers to invest in. Emerging markets have become a 'fuel bottle' Not only India, but the overall situation in emerging markets in recent years has not been very good. Also on the 4th, JPMorgan Chase announced that the global manufacturing PMI index fell from 51.2 to 50.9 in December, the lowest level in three months. In this regard, David Hensley, head of global economic collaboration at JPMorgan Chase, commented that the limited expansion of global manufacturing activities is due to the continued decline in emerging markets such as China, India, Brazil and Russia, which have dragged down global industrial production growth. . In this regard, Huang Yiping, deputy dean of the National Development Institute of Peking University, said that there used to be a trend that the BRICS countries seemed to dominate the world economy in the future. But now it seems that this possibility has dropped significantly, and more importantly, the performance of the BRICS countries has also undergone significant differentiation. Huang Yiping said that the next step of world economic growth will probably depend on the extent of structural reforms in various countries. This is not only for the United States, Europe and Japan, but also for emerging markets. He believes that at present, short-term, non-cyclical economic policies have been exhausted, and the effect will not be obvious. However, Mark Mapus, executive chairman of Templeton's emerging markets team, is more optimistic. Mabius expects emerging markets to rebound strongly after the Fed hikes interest rates. From past experience, prior to the Fed's implementation of fiscal tightening policies, emerging markets, whether in currencies or stock markets, will experience large fluctuations and severe declines. This time, however, more and more investors are returning to emerging markets, and the trend in the data also suggests that the trend of capital outflows from emerging markets may be 'reversing'. In this regard, Maposi believes that there are still reasons to be optimistic about the longer-term prospects of emerging markets.