'India Inc expects inflation to flare up'
Nearly two-third of executives in India expects the rate of price rise to further flare up in the next six months, according to a new survey. Weekend Platter | War on Inflation
By PTI |
NEW DELHI: As if inflation at its highest level in about three years was not enough, nearly two-third of executives in India expects the rate of price rise to further flare up in the next six months, according to a new survey.
However, this pessimism level regarding the inflation among the Indian executives is much lower when compared to the places like China, Europe, North America, other developing markets and the overall Asia-Pacific region.
According to the report titled "Economic and Hiring Outlook, First Quarter 2008: A McKinsey Global Survey," as many as 64 per cent of Indian executives expect the rate of inflation to rise in the next six month, while only 20 per cent expect a decline in the rate of price rise.
About 15 per cent of Indian executives expect the inflation rate to remain unchanged in the next six months, the survey found.
The survey was conducted in March, presumably before the government data showing the rate of inflation at 7 per cent was released on April 4.
According to the survey, the percentage of executives expecting a rise in rate of inflation is less than India only in Latin America, where 58 per cent said they expected it to rise in their country from current levels in the next six months.
However, this pessimism level regarding the inflation among the Indian executives is much lower when compared to the places like China, Europe, North America, other developing markets and the overall Asia-Pacific region.
According to the report titled "Economic and Hiring Outlook, First Quarter 2008: A McKinsey Global Survey," as many as 64 per cent of Indian executives expect the rate of inflation to rise in the next six month, while only 20 per cent expect a decline in the rate of price rise.
About 15 per cent of Indian executives expect the inflation rate to remain unchanged in the next six months, the survey found.
The survey was conducted in March, presumably before the government data showing the rate of inflation at 7 per cent was released on April 4.
According to the survey, the percentage of executives expecting a rise in rate of inflation is less than India only in Latin America, where 58 per cent said they expected it to rise in their country from current levels in the next six months.
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In comparison, those expecting rise in inflation were 70 per cent in China, 69 per cent in Europe, 75 per cent in North America, 76 per cent in Other Developing Markets and 79 per cent in Asia-Pacific.
According to the report, the executives' fears of inflation have risen and the proportion of business representatives who expect to be able to raise prices (of their products) has fallen.
"Over past six months of economic turmoil, executives' fears of inflation have increased substantially," McKinsey said.
Globally, 72 per cent of respondents said they expect higher inflation over the next six months, compared to 39 per cent in a previous survey six months ago.
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For the survey, Australia, Hong Kong, Japan, New Zealand, Philippines, Singapore, South Korea and Taiwan were also included in the Asia-Pacific region. The survey further stated that about 83 per cent of the respondents expect a slowdown in the US to "have a somewhat or very negative effect on their national economies over the next year."
In India, about 74 per cent of the executives surveyed believe that a slowdown in the American economy would have a negative effect on the country.
However, only 21 per cent of executives report that the linkage between their national economies and the US has tightened over the past three years, the survey revealed.
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Interestingly, about 61 per cent executives in China expect better economic performance from their country in the near term. According to the report, the responses were gathered in the first half of March as the credit crisis continued to expand and drive down stock markets across the world.
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