- Data due at 1200 GMT on Wednesday 30th November
BENGALURU, Nov 28 (Reuters) – India’s economy is likely to have returned to a more normal annual growth rate of 6.2% in July-September after a double-digit expansion in the previous quarter, but weaker exports and investment will dampen future activity, as a Reuters poll showed .
From April to June, Asia’s third-largest economy posted explosive 13.5% year-on-year growth, largely due to the corresponding period in 2021 being marred by pandemic-control restrictions.
But with the Reserve Bank of India (RBI) now raising interest rates to curb inflation, which is above its 2% to 6% target range, the economy is expected to slow further.
The annual growth forecast of 6.2% for the latest quarter in a Reuters poll of 43 economists Nov. 22-28 was slightly lower than the RBI’s forecast of 6.3%. The forecasts were between 3.7% and 6.5%.
“The exceptionally favorable baseline of the April-June 22 quarter is behind us, which will lead to a normalization of the July-September 22 annual real GDP growth rate and also make it easier to gauge the truth about underlying economic dynamics,” Kaushik Das said , Chief Economist for India and South Asia at Deutsche Bank.
Despite business surveys pointing to a slowdown in economic activity in most major economies, where central banks are responding to rising inflation with higher interest rates, business sentiment in India has remained relatively strong.
Still, industrial production rose at an average annual rate of just 1.5% in the most recent quarter, the weakest in two years, pointing to a sharp slowdown in manufacturing activity, a key growth driver.
“GDP is expected to increase sequentially, led by the ongoing recovery in services. Mining and manufacturing are likely to be a drag. On the demand side, lower global growth hit exports in the second quarter (July-September),” said Sakshi Gupta, head of India economist at HDFC Bank, adding that there are signs that consumption is uneven.
The Treasury Department said on November 24 a global slowdown could dampen prospects for the country’s export business. Meanwhile, the RBI raised its policy rate to 5.9% from 4.0% in May and is widely expected to hike another 60 basis points by the end of March.
“Between December and February, headwinds to growth could become more apparent,” Deutsche Bank’s Das said.
Reporting by Indradip Ghosh; Survey by Vijayalakshmi Srinivasan, Veronica Khongwir and Maneesh Kumar; Edited by Hari Kishan, Ross Finley
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