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Business News/ News / India/  Indian economic growth likely slowed further to 4.6% in Oct-Dec: Report
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Indian economic growth likely slowed further to 4.6% in Oct-Dec: Report

The Indian economy had expanded 13.5% in April to June quarter, boosted largely because of pandemic-related statistical distortions.

India's economic growth likely slowed further to 4.6% in Oct-Dec. Premium
India's economic growth likely slowed further to 4.6% in Oct-Dec.

Amid weakening demand, India's economic growth likely slowed further in the October-December quarter and is set to lose more momentum as a series of interest rate hikes weigh on activity, according to a Reuters poll of economists. 

In the last quarter, the Gross Domestic Product (GDP) growth slipped to an annual 4.6%. However, the Indian economy had expanded 13.5% in April to June quarter, boosted largely because of pandemic-related statistical distortions. 

The survey also showed growth in Asia's third-largest economy was expected to slow further to 4.4% in the current quarter, and across 2023/24 would average 6.0%, lower than the 6.5% official government estimate published on January 31. 

However, all survey respondents predicted growth to be lower than the previous quarter and three-quarters of respondents forecast growth below 5.0%.

Sakshi Gupta, principal economist at HDFC Bank said there are base effects normalizing and pulling down the annual numbers. “The support from agriculture might be lower and also manufacturing could be a drag."

On the demand side, exports and consumer demand likely contributed to the slowdown, while investments held steady, she added. 

"Inflation is continuing to remain very high and interest rates are increasing. Pent-up demand has also started moderating," said Gupta as quoted by Reuters. 

The Reserve Bank of India has raised interest rates by a cumulative 250 basis points since last May to tackle inflation and is likely to do so again in April. Those past moves are expected to have a lagged effect on consumption and economic growth.

External demand is also likely to moderate as major central banks around the world continue raising rates.

"We expect growth for the domestic economy to hold up, but a greater-than-anticipated spillover impact from weak global conditions...may have more pronounced implications for domestic growth in the near term," noted Upasana Chachra, chief India economist at Morgan Stanley.

Meanwhile, IMF Managing Director Kristalina Georgieva said that the Indian economy will alone contribute 15 percent of the global growth this year, as the country continues to remain a relative "bright spot" in the world economy.

At a time when the IMF is projecting this year to be difficult with global growth slowing down from 3.4 per cent in 2022 to 2.9 per cent in 2023, India remains a bright spot, she said. 

 

(With Reuters inputs)

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Published: 24 Feb 2023, 11:18 AM IST
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