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Home arrow News arrow Business News arrow Increases in interest rates seem to slow India's manufacturing growth: UNIDO
Increases in interest rates seem to slow India's manufacturing growth: UNIDO Print E-mail
Written by Viswanath   
Friday, 16 September 2011
New Delhi: "A slowdown of India's manufacturing growth seems to be related to successive increases in interest rates to combat inflation and a decline in business confidence," , says a report released today by the United Nations Industrial Development Organization (UNIDO).

According to the report, the world manufacturing output rose by 5.2 per cent in the second quarter of 2011 compared to 7.4 per cent in the first quarter.

Under the prevailing trend the overall growth of manufacturing value added (MVA) this year is expected to be 5.2 per cent which is slightly lower than in 2010.

The report states that developing countries have maintained higher growth rates of manufacturing production increasing by 11.1 per cent. Their manufacturing value added  is expected to grow by 8.4 per cent in 2011.

China has made the major contribution to this growth. Its output increased by 14.3 per cent in the second quarter compared to the same period of 2010. Turkey’s manufacturing output grew by 8.3 per cent. Higher growth rates of manufacturing output were observed in Latin American countries – Argentina 8.5 per cent, Chile 7.8 per cent and Peru 5.8 per cent. However, the manufacturing output of other major developing economies such as Brazil, India and Mexico slowed in the second quarter and remained below 5 per cent.

The manufacturing output of industrialized countries rose merely by 2.7 per cent in the second quarter compared to 5.4 per cent in the first quarter. For the year 2011, MVA growth of industrialized countries is likely to be around 3.2 per cent.

The growth rate of the manufacturing output of the United States, the world’s largest manufacturer, dropped to 4.4 per cent in the second quarter from almost 7 per cent in the first quarter. Manufacturing output growth rates fell in France, Italy and the United Kingdom. Germany maintained high growth of 9.4 per cent in the second quarter.

Manufacturing output fell by 10.8 per cent in Greece and by 0.8 per cent in Spain. Significant decline was observed in Japan after the natural disaster with its manufacturing output falling by 7 per cent.

The report also contains the growth estimates for the second quarter by major manufacturing sectors. Production of basic consumer items such as food products, apparel and footwear remained high in developing countries. Significant rise was observed in the production of general machinery and office equipment in industrialized countries.

At the same time, production of motor vehicles fell significantly especially due to severe decline of this industry in Japan.

This is the first time that UNIDO released the early estimates of annual MVA growth based on the production report of the first two quarters.

UNIDO Statistics publishes quarterly production estimates to inform the international data users about the current status and growth trends of world manufacturing output. The annual data on production, employment and capital formation are published in the International Yearbook of Industrial Statistics.

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