July 30, 2003

You Do Need a Weatherman

This is probably the last generation for which this is true, but it's still the case that the health of the Indian economy depends on the quality of the monsoon...

Morgan Stanley: We have been highlighting the positive trend in monsoons for the past six weeks.  The trend observed in this period makes us believe that the F2004 agricultural output will be significantly higher than normal.  Hence, we are revising our GDP growth estimate for F2004 and F2005 to 6.2% and 5.9% from 5.3% and 5.5%, respectively.  While the higher agricultural growth should push up the headline GDP growth in F2004, the impact of this on the industrial activity will likely be seen only in F2005.  We therefore expect industrial growth, the key to corporate earnings, to remain weak until end-F2004 before recovering from the quarter ended June 2004.

The monsoon has been better than normal this year on all measures.  Despite agriculture%u2019s declining share in GDP, we believe the importance of the monsoon season and its influence on agriculture growth continues to be critical for overall economic growth, especially industrial growth...

Posted by DeLong at July 30, 2003 10:36 AM | TrackBack

Comments

Brad,

US economic performance still depends on the weather. High crude oil prices coinciding with a hard winter can pare points off Q4/Q1 GDP. Why would what is true for the US now not be true for India a generation hence?

Posted by: K Harris on July 30, 2003 01:45 PM
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