The latest indicators shed light on worsening conditions for the Indian economy. Consumer confidence in the world’s second most populous nation fell during the past four months with no signs of stopping.
In fact, India’s lowest consumer confidence in history according to a report from MNI Indicators. The group is an agency which produces monthly reports exploring the attitudes, perspectives, and confidence across different regions.
India’s consumers across regions and cities were surveyed and the result was not positive. With consumer confidence the lowest on record, respondents reported further deterioration in their personal finances and a gloomy outlook on the future of the business environment.
The MNI India Consumer Sentiment Indicator revealed that there were more optimists than pessimists overall, but it might not stay that way for long. This is due to a sharp decline with the indicator falling to just below 110 – a record low when compared to 133 in 2012.
As illustrated by the graph from MNI above, sentiment has been on a downward trend since the start of 2014. This is especially worrisome because of two reasons. First, It kept falling despite aggressive actions from the central bank to boost the Indian economy.
Second, the decline was broad-based. This means all the five measures (durable buying conditions, long-term business conditions, short-term business conditions, expected personal finance, and current personal finance) which made up the sentiment are in the negative.
Three major factors contributing to lower confidence are worsening business conditions, deteriorating personal finances, and poor employment outlook.
Low Expectations for Indian Economy
The report found that consumers’ perception of the current and expected business situation in India were at their worst ever. The indicator is below 100 for the first time, showing the number of pessimists about the Indian economy outweigh optimists.
The current outlook on business conditions will stay, according to the report. Consumers expect future conditions will be slightly better than they are now. However, this indicator also fell to the lowest level in the survey’s history.
A main reason consumers are less confident is because of poor economic development since the Modi government’s election in 2014. This questions the verity of the strength in India’s latest GDP figures.
India’s Consumers Hit Hard
Indian consumers feel that they’re in for the worst year yet regarding their financial situation at home. Sentiment toward both current and expected personal finances are at their lowest recorded levels.
The current personal finances indicator is a measurement of whether a household is better or worse off financially than a year ago. The downward trend began in 2014.
Expectations for the future are no better than current sentiment, with expected personal finances at a record low as well. Two of the main reasons behind the gloomy outlook are higher household expenses and worse employment conditions.
Employment Outlook at Record Lows
Falling for the fourth consecutive month, Indian consumers’ outlook on employment hit a record low. Poor sentiment for future job opportunities was mutual throughout the country.
Employment outlook tends to fall in the second half of the year. The rate it fell and the new record it set are both alarming though.
The typical Indian consumer thinks times ahead will be rough. They expect worsening economic conditions, deteriorating personal finances, and less job opportunities.
With that said, InvestAsian is still bullish on the Indian economy over the long term because of its solid demographics and strong growth potential.
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