Economy faces challenges in short-term: Deloitte | business | Hindustan Times
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Economy faces challenges in short-term: Deloitte

The economy might have weathered the the global slowdown successfully so far, but it faces challenges in the next three quarters, especially with high inflation and fragile worldwide recovery, says leading global consultancy Deloitte.

business Updated: Mar 14, 2010 12:48 IST

The economy might have weathered the the global slowdown successfully so far, but it faces challenges in the next three quarters, especially with high inflation and fragile worldwide recovery, says leading global consultancy Deloitte.

"There are challenges ahead for the Indian economy in the short-term (in the next two-three quarters), mainly in the wake of uncertainties in the global economic recovery," Deloitte India principal economist Shanto Ghosh said.

"I am cautiously optimistic about the country's economic prospects in the near-term," Ghosh said and added that inflation still remains a concern.

Wholesale price inflation climbed to 8.56 per cent in January, a tad higher than the RBI projection of 8.5 per cent by the end of this fiscal.

Ghosh said a fragile and uncertain global economic recovery could hit the fund flow and even have a cascading effect on the economy. India sees a lot of foreign institutional investment in the stock market, mainly from the US. So far this year, FII inflow has crossed USD 2 billion.

However, Ghosh said the GDP growth could be higher in the fourth quarter of the current fiscal, due to continued expansion in the industrial and services sectors.

Fuelled by a slew of stimulus measures, GDP grew 7.9 per cent in the second quarter of the current fiscal. However, due to the draughts, the growth dropped to 6 per cent in the third quarter on back of a 2.8 per cent negative growth in the farm output.