India’s Economy is slowing down
2022.11.28 00:01
India’s Economy is slowing down
Budrigannews.com – A Reuters poll indicated that weaker exports and investment will limit future activity, but the Indian economy likely returned to a more normal 6.2% annual growth rate in July-September after double-digit expansion in the preceding quarter.
Asia’s third-largest economy experienced explosive growth of 13.5% from a year earlier in April and June, primarily due to pandemic-control restrictions during that time in 2021.
The economy is expected to slow further as a result of the Reserve Bank of India (RBI) raising interest rates to prevent inflation from exceeding its target range of 2% to 6%.
In a poll of 43 economists conducted between November 22 and 28, the Reuters forecast of 6.2% annual growth was slightly lower than the RBI’s view of 6.3%.The forecasts ranged from 3.7% to 6.5%.
According to Kaushik Das, India and South Asia chief economist at Deutsche Bank (ETR:), “The exceptionally favourable base of the April-June ’22 quarter is behind us, which will result in a normalization of the year-on-year real GDP growth rate from July-Sept ’22 onward and also make it easier to gauge the true underlying economic momentum.”
Business sentiment has remained relatively strong in India, despite business surveys indicating weakening economic activity in most major economies, where central banks are responding to soaring inflation with higher interest rates.
Still, industrial production grew at an annual rate of only 1.5% in the last quarter, the lowest rate in two years. This suggests that manufacturing activity, which is a key driver of growth, is significantly slowing down.
“The continued recovery in services is expected to lead to a sequential increase in GDP.It is anticipated that manufacturing and mining will be a drag.According to Sakshi Gupta, principal India economist at HDFC Bank, “on the demand side, lower global growth hit exports in Q2 (July-September),” adding that there were indications of uneven consumption.
On November 24, the finance ministry stated that the outlook for the country’s export businesses may be impacted by a global slowdown.In the meantime, the Reserve Bank of India (RBI) raised its key policy interest rate in May from 4.0% to 5.9% and is widely anticipated to add 60 basis points by the end of March.
