US, Eurozone crisis making financial markets nervous: Pranab
Tuesday September 13, 2011 06:36:33 PM,
IANS
|
New Delhi: Financial
markets are getting "nervous" due to high inflation, slowdown in
economic growth and aggravating sovereign debt problems in the US
and European economies, Finance Minister Pranab Mukherjee said
Tuesday.
"Advanced economies, the Eurozone and the US, are seized with
sovereign debt problems. This is making financial markets
nervous," Mukherjee said at a conference organised by the Indian
Council for Research on International Economic Relations (ICRIER)
here.
He said growth in most advanced economies had declined in the
second quarter of 2011 and emerging markets were "witnessing a
combination of moderation in growth and rising inflation".
"Even the tepid global economic recovery that we have seen so far
is stalling," he said.
India's GDP growth declined to 7.7 percent in April-June 2011
period, slowest in six quarters. India's industrial output slumped
to 3.3 percent in July, the slowest growth in two years.
Growth has declined across the world leading to slump in the
global stock markets.
Mukherjee emphasised on the need for a collective effort to
overcome the economic crisis situation.
The finance minister said aggressive monetary tightening by the
central bank was also hurting growth.
"Emerging markets recovered quickly from global slowdown, but are
facing elevated commodity prices, inflation, moderating growth and
volatile capital flows all at once," he said.
"Central banks have been forced to raise policy rates repeatedly,
potentially compromising growth in the short-term," he added.
The Reserve Bank of India (RBI) has hiked its policy rates 11
times since March 2010 to curb inflation. However, despite an
aggressive monetary tightening inflation has remained stubbornly
high, near double-digit, much above the central bank's comfort
level of 4-5 percent.
As per the latest official data, the headline inflation for July
was 9.2 percent and food inflation was 9.22 percent for the week
ended Aug 27.
The finance minister said the central bank was confronted with
problem of curbing inflation, keeping growth high and managing
capital inflow.
"They are also confronted with the impossible trinity. While
raising rates may help stabilise growth, it may also invite more
capital inflows," he said.
Mukherjee said managing capital flows was crucially important for
emerging economies like India.
"Large and volatile capital flows to emerging markets can be
destabilising as they lead to high exchange rate volatility and,
in some cases, make it incumbent to maintain high levels of
foreign exchange reserves as an insurance against sudden or
large-scale flight of international capital," he said.
|
|
|
Home |
Top of the Page |
|
|
|
|
|
|
|
|
|
|
Top
Stories |
NIA
admits error in probe; Declares Malegaon youths innocent
The National Investigation Agency (NIA) has finally concluded that
the nine Muslim youths who were arrested and jailed in 2006 in
connection with the Malegaon blasts are innocent, a media report
claimed. »
Agonized
families, resolute protesters and barefaced government
ATS haste
that brought hell to an entire family
|
|
Most
Read |

Trial
court to hear Gulberg carnage case: Apex court
The Supreme
Court Monday directed a trial court to hear a petition by Zakia
Jafri, widow of former MP Ehsan
»
I am upset, disappointed: Zakia Jafri
|
Bihar's Sidra follows Fazilath,
joins IGNOU gold medalists' club
Sidra Jamal, a resident of Sultanganj area of Bihar's capital
Patna, has won a gold medal for her postgraduate Diploma in
Computer Applications from Indira Gandhi National Open University (IGNOU).
»
Fazilath Khan of Jeddah among five to win IGNOU gold medals
|
|
News Pick |
Pakistan, India ink pact to tackle drug trafficking
Pakistan
and India have signed a pact to check cross-border drug
trafficking.
The memorandum of understanding (MoU) was signed Monday, Dawn
reported from Rawalpindi. Prior to the signing, an 11-member
delegation
»
|
3,000 more jobs for Kashmiri Pandits soon
Jammu and
Kashmir will advertise 3,000 more jobs for displaced Kashmiri Pandits as part of a package announced by Prime Minister Manmohan
Singh in which 6,000 people were promised employment in
»
|
Salman cries, but no one takes him home
He
cries every day to be taken back to his mother, but eight-year-old Salman's pleas fall on deaf ears at the children's reform centre
in Barmer district that has been his home for over two months. He
had run away from his
»
|
|
Picture of the Day |
 |
The 27th of
Ramadan (August 26, 2011 this year), "Laylet al-Qadr" (Night
of Power), is one of the holiest nights of the Islamic
calendar, the night when the Quran began to be revealed to the
Prophet Muhammad (Peace be upon him). Millions from around the
world visit the Grand Mosque in Makkah from all over the world
and pray over the night. |
|
|
|