Indian economy grows 13.5% but misses target | Business and Economy News


The jump is due to the low basis of the previous quarter and economists have warned of a slowdown.

India’s economy grew 13.5% in the April-June quarter from a year earlier, the fastest pace in a year, amid fears of a sharp slowdown in growth this quarter and the next two, rising interest rates hitting activity.

The jump came on the back of a revival in agriculture and manufacturing as pandemic drag eased, official data showed Wednesday.

Economists in a Reuters poll had forecast gross domestic product in Asia’s third-largest economy to rise 15.2% year-on-year in the April-June quarter, from 4.1% in the previous quarter.

The large apparent jump in growth, which is lower than the 20.1% annual growth recorded in the same quarter the previous year, is due to the weak base of the previous quarter and economists have warned that growth in this quarter could be followed by a slowdown. .

“Going forward, with the global headwinds, India’s external sector would face a challenging period,” Rajani Sinha, chief economist at CARE Ratings, said in an emailed note to Al Jazeera.

“It will be essential that domestic consumption and investment pick up momentum. The recovery in consumer demand has so far been uneven with weak rural demand. While lower inflation will support overall consumer spending, an uneven monsoon will hurt rural demand,” she said.

In July, the International Monetary Fund revised its growth forecast for India from 8.2% to 7.4% for the current fiscal year, which started in April.

Despite the overhaul, India would still be among the fastest growing major economies in the world.

The double-digit growth in the April-June quarter comes at a time when the global economy is under pressure, with most countries facing high inflation. Prices have risen as Russia’s invasion of Ukraine continues, driving up energy and food prices.

India’s economy was recovering from a pandemic-induced slump when a spike in Omicron-fueled coronavirus cases from January prompted authorities to reinstate some virus-related restrictions.

Multiple waves of COVID-19 outbreaks have hit India’s vast informal sector hard, with unemployment hitting nearly 8.5% in August, according to data from the Center for Monitoring Indian Economy think tank.

India’s central bank projected inflation of 6.7% for this fiscal year and raised its key rate by 50 basis points to 5.4%, its third hike since May.

The economy grew 8.7% in the prior fiscal year after contracting 6.6% in the 2020-21 fiscal year.


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