India economy slows as global slowdown hits

NEW DELHI - India’s economy grew at its slowest pace in nearly six years in the third quarter as the Asian giant started to feel the full brunt of the deepening global downturn, official data showed on Friday.

By (AFP)

Published: Fri 27 Feb 2009, 2:20 PM

Last updated: Thu 2 Apr 2015, 3:59 AM

The worse-than-expected 5.3 percent expansion in the three months to December, down from 8.9 percent a year earlier, spurred expectations the central bank will cut interest rate further to boost the flagging economy.

India’s government has long said it needs double-digit growth if it is to drag hundreds of millions of its people out of grinding poverty.

The latest data provided grim reading for the Congress-led government, which must face general elections by May, and has been eager to spur the economy ahead of the polls.

“The massive slowdown in growth...has now dismissed speculation India is more resilient in this global turmoil because its economy is more domestically oriented, said Sherman Chan, an economist at Moody’s Economy.com.

Growth in Asia’s third-largest economy was sharply lower than the 7.6 percent expansion recorded in the second quarter and came in below analysts’ forecasts of 6.1 percent.

Agricultural production, which accounts for nearly 20 percent of gross domestic product and provides a living for two-thirds of Indians, contracted by 2.2 percent compared with 6.9 percent growth in the year-ago period.

Manufacturing activity shrank by 0.2 percent, down from growth of 8.6 percent a year earlier amid flagging domestic and export demand.

Construction growth slowed to 6.7 percent, from 9.0 percent a year earlier.