A HIKE IN CONSUMER CREDIT CAN IMPACT INDIAN ECONOMY

On Thursday, it was the first time when consumer credit in USA reached to $4 trillion according to Federal Reserve. The consumer borrowing slowed down to $ 16.6 billion in December and the growth rate in November reduced from 6.8% to 5%. Still economists are expecting a satisfactory gain of $17.5 billion. The surprising up rise in the US economy have been noticed due to rising credit on credit cards which rose by 2% in December and 5.6% in November and 11% in October. Credit on student loans rose by 6% in December.

With the low employment and steady income growth, consumers are trapped with high credit demands from banks. Still US economy had collected a huge amount. With this sharp increase, there will be more money flow in the economy and it can indirectly affect India as US is the largest exporter  of Indian products. This can affect India’s market fluctuations on both positive and negative aspects. With the high currency flow in the economy there will be more chances of depreciation of Indian currency as it is seen more often from last year.

Positive aspects can also be seen as there will be more inflow of US currency in Indian market followed by more money generation and increased in GDP and stock market. Both can face marginal fluctuations.

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