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India's Q2 GDP growth slows to 8.9 pct year-on-year UPDATE
Fri, 30th Nov 2007 08:53
(Adds economists comment)
NEW DELHI (Thomson Financial) - India's blistering economic growth slowed to 8.9 pct in the second quarter to September, from a year earlier, hit by a downturn in manufacturing, according to government data released on Friday.
The GDP was lower from the revised 10.2 pct growth registered in the same quarter last year and was also weaker than the 9.3 pct growth posted during the April-June quarter of the current financial year.
D K Joshi, principal economist, Crisil, Standard & Poor's Indian unit, said, 'The slowdown in the GDP growth was along expected lines, indications of which were provided by the industry numbers since the past three months. The slowdown has been more or less engineered by the Reserve Bank of India through its tight monetary policy.'
Manufacturing grew by 8.6 pct in the second quarter, down from 12.7 pct in the corresponding quarter the previous year, due to tighter monetary policy and a rising rupee.
Joshi sees growth slipping further in the next two quarters on a year-on-year basis, culminating with a figure close to 8 pct in the last quarter. 'Growth for the whole year will, however, average, a tinge over 8 pct,' Joshi said.
Over the long-term, Joshi sees India growing by 8.5 pct per year, on an average, for the next five years.
Joshi said the investment numbers for the quarter are higher over the same quarter a year ago in spite of a slowdown in growth.
Sonal Varma, Indian Economist, Lehman Brothers, said, 'We expect India to remain in a transitory soft patch as GDP growth slows to 8.8 pct in FY08. The near-term outlook hinges to a large extent on the outlook for global growth. If the global economy weakens sharply then India is likely to be hurt through weaker exports, credit tightening by banks and reduced portfolio inflows.'
Varma also said the output growth in both manufacturing
and services in the country slowed because of domestic monetary policy tightening, but investment growth remains resilient.
'Encouragingly, investment grew by 15.2 pct year-on-year in Q2, slower than 15.9 pct in Q1, but still very robust,' Varma said. She added that the net exports were a positive contributor to growth, mainly because of a decline in import growth.
Varma said the nation is less exposed than most other Asian countries and its ongoing investment boom remains a bright spot and is likely to keep India amongst the best growth performers in Asia.
TFN.newsdesk@thomson.com
aku/man/jfr/aku/aka/man/jfr
COPYRIGHT
Copyright Thomson Financial News Limited 2007. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
NEW DELHI (Thomson Financial) - India's blistering economic growth slowed to 8.9 pct in the second quarter to September, from a year earlier, hit by a downturn in manufacturing, according to government data released on Friday.
The GDP was lower from the revised 10.2 pct growth registered in the same quarter last year and was also weaker than the 9.3 pct growth posted during the April-June quarter of the current financial year.
D K Joshi, principal economist, Crisil, Standard & Poor's Indian unit, said, 'The slowdown in the GDP growth was along expected lines, indications of which were provided by the industry numbers since the past three months. The slowdown has been more or less engineered by the Reserve Bank of India through its tight monetary policy.'
Manufacturing grew by 8.6 pct in the second quarter, down from 12.7 pct in the corresponding quarter the previous year, due to tighter monetary policy and a rising rupee.
Joshi sees growth slipping further in the next two quarters on a year-on-year basis, culminating with a figure close to 8 pct in the last quarter. 'Growth for the whole year will, however, average, a tinge over 8 pct,' Joshi said.
Over the long-term, Joshi sees India growing by 8.5 pct per year, on an average, for the next five years.
Joshi said the investment numbers for the quarter are higher over the same quarter a year ago in spite of a slowdown in growth.
Sonal Varma, Indian Economist, Lehman Brothers, said, 'We expect India to remain in a transitory soft patch as GDP growth slows to 8.8 pct in FY08. The near-term outlook hinges to a large extent on the outlook for global growth. If the global economy weakens sharply then India is likely to be hurt through weaker exports, credit tightening by banks and reduced portfolio inflows.'
Varma also said the output growth in both manufacturing
'Encouragingly, investment grew by 15.2 pct year-on-year in Q2, slower than 15.9 pct in Q1, but still very robust,' Varma said. She added that the net exports were a positive contributor to growth, mainly because of a decline in import growth.
Varma said the nation is less exposed than most other Asian countries and its ongoing investment boom remains a bright spot and is likely to keep India amongst the best growth performers in Asia.
TFN.newsdesk@thomson.com
aku/man/jfr/aku/aka/man/jfr
COPYRIGHT
Copyright Thomson Financial News Limited 2007. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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