Friday, February 27, 2009

India's Q3 GDP growth drops 2.3 per cent QoQ

India's economy grew a slower than expected 5.3 per cent in the December quarter from a year earlier, slowing sharply from the previous quarter's 7.6 per cent as the global economic crisis cut demand and exports.

The annual growth for India's fiscal third quarter was lower than a median forecast of 6.2 per cent in a Reuters poll of economists and also lower than a upwardly revised 8.9 per cent annual expansion in the same quarter a year ago.

Farm output in the December quarter fell an annual 2.2 per cent vs a rise of 2.7 per cent in July-Sept quarter.

Manufacturing fell an annual 0.2 per cent in Oct-December vs a growth of 5.0 per cent in the July-September period.

Construction grew 6.7 per cent in Oct-Dec vs 9.7 per cent in July-September.

Trade, hotels, transport and communication grew 6.8 per cent in Oct-Dec vs 10.7 per cent in July-Sept.

Financing, insurance, real estate and business services grew 9.5 per cent in Oct-Dec vs 9.2 per cent in July-September.

"The only factor which seems to be growing strongly is the community and social services sector. But seeing that other sectors have slowed down significantly, we expect the government's advanced estimate to be revised to closer to 6.3 per cent, and we maintain this as our forecast," said economist Anubhuti Sahay.

The partially convertible rupee fell slightly to 50.73/74 per dollar from 50.68/69 just before the data. It had closed at 50.45/47 on Thursday, and hit a record low of 50.78 on Friday morning.

The 2018 bond yield fell to 6.41 per cent from 6.43 per cent just before the GDP data. It had ended at 6.51 per cent in the previous session.

The 30-share BSE index extended losses to be down 1.6 per cent at 8,815.52 points. It was trading down about 0.9 per cent before the data.

India's economy, Asia's third-largest, is largely driven by domestic demand and strong growth of 9 per cent or more in the past three fiscal years has attracted global attention.

But the impact of the global financial crisis is now being felt and growth is officially estimated to slow to 7.1 per cent in 2008/09 from 9.0 per cent in the previous year.

The government has rolled out a slew of steps to tackle the slowdown, including aggressive interest rate cuts, tax and duty cuts and extra spending.

Annual inflation has slowed to below 4 per cent in mid-February from a peak of nearly 13 per cent in August, and the central bank estimates it to fall to 3 per cent by end March.

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