India unlikely to see spectacular growth for some time: Robert Parker, Credit Suisse

NEW DELHI: With multiple problems such as budget, trade and current account deficit plaguing the Indian economy, Robert Parker, Senior Advisor, Credit Suisse is of the opinion that there are very little chances of India witnessing a spectacular growth in the coming months.

However, with stable commodity prices, a weak rupee and easier monetary policy, Parker feels that the Indian economy will grow at around levels of 6% over the next few months.

Asked about the likely stance of the Reserve Bank of India (RBI), in its monetary policy review on July 31, Parker said that the central bank may cut rates one more time later this year. Faced with slow growth and high inflation, Parker feels that the RBI is in a very difficult situation.

He emphasisied the need for the Indian government to adopt a proactive approach to attract foreign investment, particulary after the Vodafone tax case. He also feels that reforms are needed in the retail sector.

Parker is of the opinion that the Indian IT sector is highly competitive in the global scenario. "The Indian IT sector should benefit from a weak rupee and strong surplus corporate liquidity," he said.

Parker said that emerging markets should no longer be treated as a cluster. He sees Brazil and Russia growing at 3-4% in the coming months. Commenting on China, he said, "Boosted by the monetary policy, the Chinese economy will see a modest recovery in the coming quarters."

Speaking on the European crisis, Parker said that southern Europe, particularly Spain will continue to struggle going forward. He sees a likely contraction in the Spanish economy.

On the other hand, Northern Europe, mainly Germany is likely to see recovery in the coming years and the German economy may grow at 1.5%. Parker also said that the IMF has upwardly revised its growth forecast for Germany.

While there are less chances of the US economy slipping back into recession, Parker said that if no agreements are reached on the debt ceiling and public expenditure, then the US economy, post presidential elections may struggle in the first half of 2013.