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Q3 GDP growth at 5.3% vs 8.9% YoY: Lowest in 6 yrs

This article was posted on Feb 27, 2009 and is filed under Press Releases

The Indian economy has slowed down in no small measure. The third-quarter gross domestic product (GDP) grew at 5.3% compared to 8.9% during the same quarter last year while the GDP growth for the previous quarter stood at 7.6%. The Indian economy has registered its slowest growth since March 2003.

The government has forecast the economy to grow at full-year 7.1% during the full year — it may be recalled that the country’s economy clocked 9%-plus growth during the past three years and Pranab Mukherjee recently spoke of the achievement. With the latest third-quarter GDP figure, experts now say the economy may find it difficult to achieve even 7% growth for the full year.

Industry experts also say that GDP growth is expected to improve for the fourth quarter. The October-December quarter was especially hard on the Indian economy — liquidity hit its lowest point and the stock markets tanked to their troughs during this period.

Reacting to the GDP numbers, Suresh Tendulkar, the chairman of Prime Minister’s Economic Advisory Council, said the GDP data should act as a trigger for a rate cut from the Reserve Bank of India (RBI). “Some improvement is likely in Q4 GDP data,” Tendulkar said.

With inflation continually heading lower, the RBI is now expected to use the headroom to swiftly cut rates to further boost the economy.
Agriculture, manufacturing hit

The agriculture sector was especially below expectations at 2.2%. Manufacturing took a hit too, which was not surprising given the fact the index of industrial production (IIP) growth number — whatever has been reported still — has been dismal.

Q3 GDP internals:

Farm sector output is at 2.2% versus 6.9% YoY

Manufacturing output is at 0.2% versus 8.6% YoY

Mining sector growth is at 5.3% versus 4.3% YoY

Construction growth is at 6.7% versus 9% YoY

Industry growth is at 2.4% versus 8% YoY

Services sector growth is at 9.9% versus 10.2% YoY

source: Moneycontrol

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