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Indian GDP growth lowest in 15 months

Filed on February 28, 2019
Indian GDP growth lowest in 15 months
Consumer spending slowed to an 8.4 per cent rise annually in the December quarter. - AFP

India's economy grew a lower-than-expected 6.6 per cent in the October-December period, the lowest in five quarters, dragged by lower farm and manufacturing growth, government data showed on Thursday.

A Reuters poll of economists had forecast a growth of 6.9 per cent for the December quarter, compared with a downwardly revised 7 per cent rise in July-September.
The government also revised its 2018-19 GDP growth estimate to 7 per cent from 7.2 per cent.

Data from the Statistics Ministry showed the decline in growth was led by a slowdown in consumer spending and investments. Consumer spending, which accounts for near 60 per cent of the economy, slowed to an 8.4 per cent rise annually in the December quarter, compared to a revised 9.9 per cent rise in the previous quarter.

Gross fixed capital formation - which include spending on roads, ports, airports and power plants - rose 10.6 per cent compared with a revised 10.2 per cent annual increase in the previous quarter.

The manufacturing sector grew at 6.7 per cent annually, the data showed, while services, including construction, grew at 7.6 per cent from a year ago period.

"The Q3 gross value added (GVA) growth was in line with our expectations but the GDP data was somewhat higher. The revisions to data suggest that the economy had lost momentum starting from the second quarter itself. Headwinds to consumption and external demand are weighing on growth even as the nascent capex recovery is providing some signs of hope," said A Prasanna, chief economist, ICICI Securities Primary Dealership.

"The economy is entering FY20 with a weak momentum. Lower oil prices, lower interest rates and continued capex growth should help in growth recovering to 7.3 per cent in FY20. With growth outcomes weaker than expected and inflation expected to be below target, we see the MPC cutting policy rates by 25 bps in April." - Reuters

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