It is not out of the blue that the IMF tells the world that India is the best economy to invest in during grim economic times around the world. Indian factory activity grew at its fastest pace in four months in July as export orders jumped. The muted prices have given room to the central bank to ease policy further if required.
The Nikkei/Markit Manufacturing Purchasing Managers’ Index rose to 51.8 in July from June’s 51.7, which marks its seventh month above the 50 level that separates growth from contraction.
“India’s manufacturing economy is reviving at the beginning of the second half of 2016 after the slowdown seen in the April-June quarter, as growth in both production and new orders continued to strengthen in July,” said Pollyanna De Lima, economist at survey compiler Markit.
Focusing on the major performers, the segment of consumer goods saw the strongest pace of expansion, while export orders rose the fastest since January. A major factor driving the exports was the depreciating rupee.
“With inflation rates remaining lower than their respective long-run averages, it wouldn’t be surprising to see the Reserve Bank of India loosening monetary policy at its August meeting in an effort to encourage investment,” said De Lima.