Economic confidence of Indians shaky: Ipsos

MUMBAI: India’s economic confidence remained shaky due to gloomy investor sentiments, chronic gaps in infrastructure, high inflation and interest rate, according to a report by global research firm Ipsos.

According to the Ipsos Economic Pulse of the World Survey, India‘s economic confidence dropped further by two points to 70 per cent in the month of May compared to the previous month.

However India continued to hold the second most economically confident country position after Saudi Arabia which stayed at the top of the table with a wide margin at 88 per cent.

Ipsos India CEO Mick Gordon said, “The symptoms of Indian economy being in poor health are building fast with growth rate slipping to a nine-year low of 6.5% in 2011-12, current account deficit touching a high of 4% and inflation at a high of 7.55% in May. Rupee has plunged sharply in recent weeks especially on account of foreign fund outflows and gloomy investor sentiments. It has lost over 20% against the US dollar over the past few months.”

“The chronic gaps in infrastructure, a shortage of skilled labour, unproductive farming, government expenditure on inefficient subsidies, barriers to overseas companies looking to invest and a proposal for punitive retrospective taxation on foreign companies has added to the already slowing growth,” added Gordon.

Half of the Indian population believe their local economy is good and 54 per cent people expect that the economy in their local area will be stronger in the next six months.

“Now hopes of revival are pinned at Dr. Manmohan Singh who takes over the finance portfolio. He is expected to bring in changes to revive the stalled economic growth, arrest the rupee‘s fall and deal with the fallout of a possible breakup of the euro zone, a tough task,” added Gordon.

The Ipsos report, which examined citizens‘ assessment of the current state of their country‘s economy, said that the overall global economic engines has lost significant steam in May and has dropped another point to 37 per cent, the lowest it has been since the economic downturn of 2009.

The Ipsos Economic Pulse of the World survey was conducted in May 2012 among 18,713 people in 24 countries such as Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Great Britain, Hungary, India, Indonesia, Italy, Japan, Mexico, Poland, Russia, Saudi Arabia, South Africa, South Korea, Spain, Sweden, Turkey and the United States of America.

Saudi Arabia again shows the strongest proportions of people rating their current national economic situation as ‘good’ (88 per cent). They are followed by: India (70 per cent), Germany (69 per cent), Sweden (64 per cent), China (63 per cent) and Canada (62 per cent).

Only a handful of those in Spain (three per cent), Italy (three per cent) and Hungary (three per cent) rate their national economies as ‘good’, followed by Japan (nine per cent), France (nine per cent) and Great Britain (10 per cent).

Countries with the greatest improvements in this wave are Belgium (+7 to 28%), Argentina (+7 to 45%), Indonesia (+4 to 40%) and Russia (+3 to 36%).

The nations that saw the sharpest declines are Brazil (-10 to 49 per cent), Sweden (-7 to 64 per cent), Mexico (-5 to 28 per cent) and the US (-4 to 23 per cent).

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