INDIA’S ECONOMIC growth has slowed down in the past few years. In the July-September quarter, it was 4.5 per cent, the lowest in six years. Accordingly, the National Statistics Office has reduced its growth forecast for the year 2019-20, from 6.1 per cent to 5 per cent.
How do you reposition yourself as an investor in such a situation, as such shifts in economic performance could alter the market returns, which could distort your calculations on financial goals? Historical data suggest that economic slowdown is accompanied by lower returns from equity investments. For instance, the year 2008, which witnessed the global financial crisis, saw equity returns dropping to (-) 51 per cent. At the same time, such phases could mean better returns in some other asset classes. In 2008, for instance, debt investments gave a return of 28 per cent.
That gives us some direction on re strategising in the time of slow economic growth.
Rebalance your asset allocation
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