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India’s economy likely grew 4.7% in December quarter

By Ritu,

Capital Sands

Indian economic growth likely accelerated a touch in the October-December period after its weakest expansion in over six years in the previous quarter, a Reuters poll showed, with a small rebound in rural demand and private consumption expected.

Annual gross domestic product growth likely rose to 4.7% in the last quarter of 2019 from 4.5% the previous quarter, when the growth rate appears to have bottomed out, a Feb. 18-24 Reuters poll found.

About 90% of economists in the poll forecast growth for the October-December quarter at 5% or below.

“A modest recovery in the agriculture sector, coupled with a normalisation in weather conditions amid elevated government spending likely pushed growth higher,” noted economists at Barclays in their latest weekly report.

However, the momentum could be hurt by high retail inflation, which rose to 7.59% in January, potentially constraining consumption and demand.

“Overall the economy is way below potential. Even the lead indicators don’t seem to be entering a more sustainable phase of economic recovery right now, or at least in the near future,” experts said.

Policymakers at the Reserve Bank of India are considering more interest rate cuts to prop up economic growth as soon as inflation moderates to its mandated medium-term target of 4%, minutes from their meeting showed this month.

The National Statistics Office has cut its growth projection for the fiscal year 2019-20 to 5.0% from 6.1% previously.