India's oil demand to recover in 2019 - Fitch Solutions
PTI citing, Fitch Solutions Macro Research said in a note Fitch Solutions Indian oil demand, which faced substantial pressures in 2018 because of rising rates and a weakened rupee, is set for recovery next year. "Indian oil demand will become an increasingly important driver of global demand growth, as China's economy slows and the government pushes diversification away from oil," Fitch Solutions, an affiliate of Fitch Ratings, said. It put fuel consumption growth at 6 per cent in 2019, up from 5.5 per cent this year. However, the world's third largest oil consumer will not be able to replicate the strength of China's demand, with growth becoming increasingly diversified across emerging markets.
Although, their populations are of similar size, the scale of the Indian economy and its capacity for growth are not comparable to that of China, it said, adding that demand will become increasingly diversified across emerging markets, in particular, those in Asia. While this will shelter prices from any "idiosyncratic shocks" to the Indian economy, the global demand growth is set to soften in both percentage and volume terms over the coming decade, dragged down by structural declines in developed markets and China, it said.
It said that "Indian oil consumers have faced substantial pressures in 2018, from the combination of rising international oil prices and a sharp weakening in the currency. A bruising year saw the rupee fall from around 64 to a US dollar in January to 74 rupees per USD in October. Rising oil prices have worsened India's terms of trade and stoked inflation".
It added that the rupee's still-high valuation, continued inflationary pressures and rising real interest rate differentials with the US will maintain pressure over 2019, but the pace of depreciation will slow. "Our economists put the rupee at 76 to a USD at the end of 2019, up from 73 rupees to USD as of end-2018."
Source : PTI