D&B Economy Observer: Economy forecast for the month of July

Budget should address the growth centers and prioritize allocation of funds

Real Economy:The growth in Index of Industrial Production (IIP) is expected to remain subdued given the slowdown in demand, both in urban and rural segments and lack of new investment from the private sector. D&B expects Index of Industrial Production (IIP) to have grown by 3.0%-3.5% during May-19.

Price Scenario: The reversal in food prices is expected to provide upward pressure to inflation, while the moderation in demand and low crude oil prices is likely to keep the overall inflation subdued. The south-west monsoon has been delayed and the sowing of summer crops has been lower compared to last year as per the latest available data. Thus, even if there are inflationary pressures from the monsoon, it would be too early to make an estimate. D&B expects the CPI inflation to be in the range of 3.0%-3.2% and WPI inflation to be in the range of 2.2% - 2.4% during Jun 19, respectively.

Money & Finance: Lower crude oil prices, muted inflation and the fall in US treasury yields are expected to keep the yields restrained. D&B expects 15-91-day T-Bill yield to average at around 6.0%-6.2% and 10-year G-sec yield at around 7.0%-7.2% during Jun-19.

External Sector: While rupee faces appreciation pressures from foreign fund inflows, slowing growth and an increasing trade deficit are exerting depreciation pressures on rupee. D&B expects the rupee to remain at around 69.5-69.7 per US$ during Jun-19.

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