Posts Tagged ‘global economy’

Corporate India is Likely to Register 22.8% Growth

corporate India is likely to clock 22.8% growth in net profit in 2009-10

corporate India is likely to clock 22.8% growth in net profit in 2009-10

Corporate India is likely to register 22.8% growth in net profit in 2009-10 despite the slowdown in the global economy and bad monsoon.

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Centre for Monitoring Indian Economy (CMIE) in its latest report has attributed theimprovement in the margins..due to fall in input costs” as the major reason for the concerned growth of corporate India.

According to the report, the revenue of the companies will grow at much slower pace.

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The report said, “Corporate sales growth will average at a meagre 4.1% in 2009-10.

At the same time, profit after tax (PAT) will rise by a robust 22.8%.”

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The performance of the manufacturing sector, excluding petroleum sector, would be encouraging.

The report said the sectors PAT would manage to grow at 24.3% mainly on account of low raw material prices and soft interest rates.

PAT of the financial and nonfinancial services would rise by 32.2% and 20.4% respectively, the report projected.

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According to the report, corporate India took a hit on its sales due to the fall in commodity prices, drying up of export demand and postponement of purchases by the domestic consumer following the global liquidity crisis.

The report estimated that corporate profits have grown by 44% in the second quarter of 2009-10 due to the handsome profit likely to have been made by the petroleum products sector as against the losses incurred in the year ago quarter.

Aggregate PAT of the rest of the manufacturing sector is also estimated to have risen by a modest 4.5% in the second quarter, the report said.

CMIE estimated the PAT of the financial and non-financial services to have risen by 26%-29%.

Sales, however, is estimated to have fallen by 5.3%, it said.

The fall in sale realization is also because of sharp fall in the prices of the commodities.

The report said that non-financial services chose to keep their employees cost and other expenses on a tight leash and enjoyed benefit of fall in interest rates.

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Economic Indicators Part 2 :)

Hello Friends, just an extension of our yesterday’s blog on economic indicators where we talked about the categories of Economic indicators and relationship between various indicators.

ECONOMIC INDICATORS WITH A FOCUS ON STOCK MARKETS AS A LEADING INDICATOR

ECONOMIC INDICATORS WITH A FOCUS ON STOCK MARKETS AS A LEADING INDICATOR

Now in this Blog, we would look upon issues like what current economic indicators reflect about the state of Indian and global economy in coming months, factors that impact the degree of correlation and general effects of the stock maket indices(economic indicators) on the economic performance of the country.

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For Indian Markets, we can refer collected data for sensex growth, GDP growth and IIP index growth for 40 quarters over the last decade i.e FY99-FY09.

On the basis of the observation, it is analyzed that there is a correlation between the indicators; however, there is a time lag of at least 3 months between the sensex performance and economic indicators performance.

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Out of the 40 time periods being observed, the time lag and the correlation has been reflected in 80% of the cases.

Therefore, on the basis of the study, we can conclude that Indian economy might witness a revival over the next 3 to 6 months.

However, the Indian stock market indices are not only the reflection of the expectation of India Inc performance; the Indian markets are highly influenced by FII inflow too.

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Thus, Indian markets not only indicate the future economic conditions of the country but the global liquidity conditions too.

Therefore, if the stock market improvements that started towards the end of the first quarter of 2009 can be further sustained, it may be an indication that economic activity levels might start to improve towards the end of 2009 / beginning of 2010 backed by the correlation theory and time lag of 6 months to 1 year.

The Leading effect of the stock maket indices on the economic performance of the country can be rationalized on the following basis:

1) Futuristic approach of stock prices

Current stock prices reflect the expected operational performance of industry. The price of a stock equals the present value of future dividends.

Hence, stock prices should rise because of higher expected corporate profits, giving the rate of return used by investors to discount future earnings.

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Since investor’s expectations about corporate profits depend on expectations about the prospective state of the economy, then stock prices should rise or fall before the actual rise or fall of general economic activity and corporate earnings.

Thus, the stock market is forward-looking, and current prices reflect the future earnings potential, or profitability, of companies.

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Since stock prices reflect expectations about profitability and since profitability is directly linked to economic activity, fluctuations in stock prices are thought to lead the direction of the economy.

If the economy is expected to enter into a recession, for example, the stock market will anticipate this by bidding down the prices of stocks.

2) Wealth Creation Effect

The “wealth effect” is also regarded as support for the stock market’s predictive ability.

Since fluctuations in stock prices have a direct effect on aggregate spending, the economy can be predicted from the stock market.

When the stock market is rising, investors’ wealth increase and they spend more.

As a result, the economy expands.

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On the contrary, if stock prices are declining, investors experience a decrease in wealth levels and spend less.

This results in slower economic growth.

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However, the factors that impact the degree of correlation are:

the variability in interest rate,

the money supply,

the rate of inflation and

the degree of confidence of market participants regarding the state of the economy.

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Thus, although the stock market is relatively reliable as a predictor, it should be used with caution and in conjunction with other leading indicators in forecasting the turning points of business cycle.

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We can also rationalize the view of 97% economists that U.S economy will be out of recession by end of CY2009.

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However For More latest Industry,Stock Market and Economy News Updates, Click Here

BULLION TURNING TO BILLION

Gold has always been one of the favorite avenues for investors to put their money during any economic uncertainty. We’re into a new phase of this bull market that’s been going on since 2004. Factors like the credit crisis, ups and downs in the global economy, the response of the governments and the monetary authorities set up a very positive environment for gold, not only in the near term, but many years to come.
On the contrary,jewelry demand, however, has fallen off a cliffβ€”it’s almost non-existing right now and a lot of scrap is coming into the market due to very high prices. This is also one of the reasons for which we had witnessed some range bound moves in gold prices in past few months. (Two dynamics in the gold market were pulling against each other as strong investment demand and very weak jewelry demand.
Gold is up by roughly 250% since 1999 and approx. 25% from Sept. 2008 till date as we’re seeing money coming into the gold sector. I think the gold market is out of crisis mode. It has been recognized as an alternative, as a safe haven hedge. Sentiment among investors, especially individuals, is very positive. It’s mainly high net worth individuals who are buying the stuff up with a long-term view. Over the period of time we have also seen that investors are putting more and more money into gold as an investment. However, this increase in investment has come from tiny levels. Retail investment in gold remains tiny comparative to investments in equity and bond markets. Also, the physical gold market is such a tiny market comparative to equity, bond, currency and derivative markets that even small flows from these massively larger markets can result in outsize moves up in the gold price in future.

Gold has always been one of the favorite avenues for investors to put their money during any economic uncertainty.
Gold Coin

We’re into a new phase of this bull market that’s been going on since 2004. Factors like the credit crisis, ups and downs in the global economy, the response of the governments and the monetary authorities set up a very positive environment for gold, not only in the near term, but many years to come.

On the contrary,jewelry demand, however, has fallen off a cliffβ€”it’s almost non-existing right now and a lot of scrap is coming into the market due to very high prices. This is also one of the reasons for which we had witnessed some range bound moves in gold prices in past few months. (Two dynamics in the gold market were pulling against each other as strong investment demand and very weak jewelry demand.

Gold is up by roughly 250% since 1999 and approx. 25% from Sept. 2008 till date as we’re seeing money coming into the gold sector. I think the gold market is out of crisis mode. It has been recognized as an alternative, as a safe haven hedge. Sentiment among investors, especially individuals, is very positive. It’s mainly high net worth individuals who are buying the stuff up with a long-term view. Over the period of time we have also seen that investors are putting more and more money into gold as an investment.

However, this increase in investment has come from tiny levels. Retail investment in gold remains tiny comparative to investments in equity and bond markets. Also, the physical gold market is such a tiny market comparative to equity, bond, currency and derivative markets that even small flows from these massively larger markets can result in outsize moves up in the gold price in future.

G-5, G-8..Not Anymore..Its G-20 Now !!

G20-world-economy

For the world, apparently, eight is no longer enough.

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The G-8 group of powerhouse economies, which expanded from the original G-5 one by one over three decades, stepped off center stage Friday with the ascension of the G-20 into the role of overseeing the global economy.

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The Group of 20 will take on the role of caretakers of the global economy.

The shift toward multilateral decision-making is sure to please some emerging economies β€” China and India in particular β€” and irritate those Americans who believe the United States shouldn’t be handing off its power to international institutions.

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Heading into the second day of a summit aimed at ensuring the world economy emerges from its worst recession in generations with better safeguards against another crisis, the G20 also vowed to keep emergency economic support in place until a recovery is secured, according to the draft obtained by Reuters.

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The document said G20 countries had a “responsibility to the community of nations to assure the overall health of the global economy” and pledged to try to secure next year a deal in long-running world trade talks.

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Larger G-20 would take over β€” a council that, by simple virtue of a membership that unites more than 80 percent of the global economy, and would be a force to be reckoned with.

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The group, which also accounts for 90 per cent of the world’s economic output, also agreed to rein in financial industry excesses that triggered the credit crisis two years ago, and to tighten rules on how much capital banks must have to absorb losses.

The new rules aimed at improving the quality and amount of capital should be ready by the end of 2010 and will be phased in in the following two years, the draft said.


India To Press For Stimulus Package Continuance at G-20 Summit !

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India will seek continuance of the stimulus package that was devised to get the global economy out of the worst crisis since the Great Depression of the 1930s at the G-20 Summit in Pittsburgh .

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Prime Minister Manmohan Singh, who leads the Indian delegation at the summit being hosted by President Barack Obama, will voice developing countries views that the developed countries should return to the trend growth and stabilization of the banking and financial sectors.

Such measures affects exports, capital flows and investment of the developing economies.

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Indian PM is going to pitch strongly against any attempts at protectionism and advocating reforms of the international financial institutions in this G 20 Summit .

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Planning Commission Deputy Chairman Montek Singh Ahluwalia, National Security Adviser M K Narayanan, Finance Secretary Ashok Chawla are among the members of the Indian delegation which attending the summit.

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This Summit will also be attended by world leaders including British Prime Minister, German Chancellor, French PresidentΒ  among others.

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The summit represents 90 per cent of the world’s GDP, 80 per cent of the world trade and two-thirds of humanity.

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The summit is important for emerging economies like India, which have been affected by the global economic crisis not of its making, to tell the world that there was need to continue the stimulus package that was agreed at the Washington summit last November and a decision to pump in USD 1.1 trillion was decided at the London Summit in April last.

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Indian delegation are of view that the continuance of the stimulus package was in the interest of the poor countries and the emerging economies and developed economies should not adopt any strategy to exit from it.

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India will voice strongly the need for avoiding the temptation to resort to protectionism by the developed countries under the present crisis.

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India May Lead the Second Wave of IT Adoption :)

India-lead-IT-adoption-IBM

As companies kept up investments in spite of the downturn and seemed more advanced than their counterpart globally it is said that India may lead the second wave of IT adoption.

IBM Corp. has come up with the concerned statement.

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According to the IBM survey, 40% of Indian companies stated that they wanted to be first to take up a new technology, while 11% said they would wait till technology was widely available.

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Moreover, companies have cut back less and have really continued their investments in India which is balanced to lead the second wave of IT adoption whereas small-and-medium businesses (SMBs) are the engines motivating the economic development.

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On the other hand, recession forced 37% companies worldwide to decrease their IT budgets as compared to 15% in India.

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Further, the IBM recognized India as one of its main growth markets and will continue to invest here along with Brazil, China and Russia.

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Moreover, IBM plans to cash in on the business coming from SMBs representing more than 90% of all businesses employing over 90% of the world’s workforce in order to produce more patents than large firms.

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Note : For More latest Industry,Stock Market and Economy News Updates, Click Here

Gold Touches a New High of Rs 16,220 per 10 gram !

Gold-surges-alltime-high

Due to the speedy buying by stockists in advance of the festival season, in the midst of the global rates climbing to an 18-month high of $ 1,018.15 an ounce, GOLD rose by Rs 250 to touch a new high of Rs 16,220 per 10 gram in the gold market.

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However, it is said that after the metal in London increased to an 18-month high, the buying action gathered momentum as stockists indulged in buying gold.

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While, the concern was that a global economic revival may strengthen inflation in the midst of a weak dollar, enhancing demand for the metal as an alternative investment.

On the other hand, gold in overseas markets advanced 10.60 dollar, or 1.1%, to 1,018.15 dollar an ounce whereas silver coins also touched a record high of Rs 31,800 per 100 pieces.

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Further, standard gold and ornaments spurted by Rs 250 each to Rs 16,220 and Rs 16,070 per 10 gram, respectively.

On the other side, sovereign increased by RsΒ  50 to Rs 12,950 per piece of 8 gram.

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Marketmen said the precious metal might see new peaks in the coming days once the festival and marriage season starts on September 19.

Current upsurge maybe purely out of reason of stockists buying as retailers refrained from buying gold during ‘Sharaadh’, the ongoing inauspicious fortnight in Hindu mythology.

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According to analysts, gold may climb a high level of $1,100 an ounce in the overseas market in the next six months.

Silver ready shot up by Rs 700 to Rs 26,600 per kg and weekly-based delivery by Rs 910 to Rs 27,570 per kg.

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Silver coins rose to an all-time high by gaining Rs 200 to Rs 31,700 for buying and Rs 31,800 for selling of 100 pieces.

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However in between due to the increasing investment demand with the commencement of festival and marriage season, gold imports observed a huge rise during August at 21.8 tonnes as compared to the previous month where the import of the precious metal was 7.8 tonnes this year.

This shows that India’s gold imports have trebled in a gap of one month.

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Indian Stocks Rose to a 15-Month High :)

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Indian stocks rose to a 15-month high yesterday. πŸ™‚

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DLF Ltd led gains as investors judged recent declines as excessive. Mahindra & Mahindra Ltd climbed on a report it will make sports utility vehicles for overseas markets.

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DLF, the biggest real estate developer, jumped 5.5% after losing 10% in the previous five trading sessions.

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Mahindra & Mahindra, the largest sports utility vehicle maker, advanced 1.5%.

Sterlite Industries (India) Ltd, the No 1 copper producer, added 3.8% after metals prices climbed.

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The Bombay Stock Exchange’s Sensitive Index (Sensex), rose 240.26, or 1.5%, to 16,454.45, the highest since May 28, 2008.

The gauge declined 0.3% on Monday, snapping a six-day rally.

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β€œThere is strong liquidity supporting the market,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd in New Delhi. β€œYesterday’s fall has made some stocks attractive.”

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The rupee advanced against the US dollar as overseas investors added to holdings of the nation’s assets amid signs economic growth is quickening.

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The rupee climbed 0.2% to 48.655 per dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg.

The currency has risen 0.4% this month.

India’s $1.2tn economy expanded 6.1% in the three months to June from a year earlier, accelerating for the first time since 2007, the government said last month.

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Note : For More latest Industry,Stock Market and Economy News Updates, Click Here

Indian Export to Register 10% Growth during 2010-11 :)

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With all sectors including textile showing recovery, the total export from India is likely to register 10% increase during 2010-11.

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However, the growth during this fiscal (2009-10) would be either flat or marginally negative, although export observed a marginal decrease during the last financial year due to global recession.

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While, it is said that almost all the sectors in India were showing a stimulation or plus-growth, including automobile, plantation and engineering.

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On the other hand, it is said that the economic situation is not really that bad and there is a sign of revival during the last two to three months whereas the year 2010-11 is said to be good for all the sectors, particularly textile, which was feeling the ”cyclic pinch” and that would be back to business in the year.

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Though textile would continue to remain weak in 2009, there could be recovery in the year 2010 and once the demand from the USA and EU improves, it is expected to achieve a reasonable growth πŸ™‚

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However, though there was a steep export growth in textiles and clothing in the first half of 2008-09, there had been slowdown in demand from major markets, USA and EU, due to the global economic crisis.

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UNCTAD Projects 5% Growth for India :(

Indian economy

The UN body United Nations Conference on Trade and Development (UNCTAD) on Monday projected a lower growth of five per cent for India in 2009 as against Reserve Bank of India (RBI) and Government”s forecast of more than six per cent in the current financial year.

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Releasing its “Trade and Development Report 2009” in New Delhi, UNCTAD report said that it expected Indian economy to grow by five per cent in 2009.

The economy grew by 6.7 per cent in 2008-09 fiscal while in the first quarter of the 2009-10 financial year the Gross Domestic Product (GDP) expanded at 6.1 per cent.

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However, the UNCTAD report listed India as the second fastest growing economy after China, in the backdrop of the global economy set to shrink by 2.7 per cent in 2009.

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“The economic winter is far from over: tumbling profits in the real economy, previous over-investment in real estate and rising unemployment will continue to constrain private consumption and investment for the foreseeable future.

Even economies that will grow this year, such as those of China and India, are slowing significantly compared to previous years. The crisis is unprecedented in its depth and breadth leaving virtually no country unscathed,” it said.

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Further, the report said that improvement of certain financial indicators reached in the first quarter of 2009 as well as falling interest rate spreads on emerging-market debt and corporate bonds and the rebound in securities and commodity prices were seen as green shoots of economic recovery.

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UNCTAD has said the growth rate of developed nations is expected to contract by 4.1 per cent in 2009, while it is likely to decelerate to 1.3 per cent in 2009 from 5.4 per cent in 2008 for developing countries.

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The UN body United Nations Conference on Trade and Development (UNCTAD) on Monday projected a lower growth of five per cent for India in 2009 as against Reserve Bank of India (RBI) and Government”s forecast of more than six per cent in the current financial year.

Releasing its “Trade and Development Report 2009” in New Delhi, UNCTAD report said that it expected Indian economy to grow by five per cent in 2009. The economy grew by 6.7 per cent in 2008-09 fiscal while in the first quarter of the 2009-10 financial year the Gross Domestic Product (GDP) expanded at 6.1 per cent. However, the UNCTAD report listed India as the second fastest growing economy after China, in the backdrop of the global economy set to shrink by 2.7 per cent in 2009.

“The economic winter is far from over: tumbling profits in the real economy, previous over-investment in real estate and rising unemployment will continue to constrain private consumption and investment for the foreseeable future. Even economies that will grow this year, such as those of China and India, are slowing significantly compared to previous years. The crisis is unprecedented in its depth and breadth leaving virtually no country unscathed,” it said.

Further, the report said that improvement of certain financial indicators reached in the first quarter of 2009 as well as falling interest rate spreads on emerging-market debt and corporate bonds and the rebound in securities and commodity prices were seen as green shoots of economic recovery.

UNCTAD has said the growth rate of developed nations is expected to contract by 4.1 per cent in 2009, while it is likely to decelerate to 1.3 per cent in 2009 from 5.4 per cent in 2008 for developing countries.