Q3 GDP growth slows to 5.4%, annual expansion put at 8.9% - Times of India

Q3 GDP growth slows to 5.4%, annual expansion put at 8.9% – Times of India


NEW DELHI: The Indian economy is estimated to grow marginally slower in the current fiscal year that ends in March than forecasts had showed earlier, as the impact of the Covid-19 pandemic hurt expansion.
Rising inflationary pressures and the effects of the war in Ukraine are also likely to impact the economic recovery underway in the months ahead.
Data released by the National Statistical Office (NSO) on Monday showed the economy is estimated to grow by 8.9% in 2021-22, a little lower than the previous forecast of 9.2%.
The economy had contracted by 6.6% in the previous year as the pandemic took a toll on growth.
The 8.9% estimated growth for 2021-22 will, however, still help the country to maintain its status as the fastest growing major economy in the world.
The data also showed that the economy slowed in the October-December quarter of 2021 as the base effect waned and the impact of the coronavirus-induced curbs weighed on expansion.
Growth in the three months to December slowed to 5.4% from 8.5% in the second quarter and 20.3% in the first quarter.
Slowing manufacturing and construction weighed on growth while the services sector, which accounts for over 50% of the country’s gross domestic product, remained steady.
Trade, hotels, transports, communication and services related to broadcasting were the only sectors which remained sluggish.
According to SBI Research, the third quarter absolute numbers of these sectors are still 95% lower than the pre-pandemic level (the third quarter of FY20).
“Private consumption is below the pre-pandemic level and this is largely because labour intensive sectors such as trading and construction have not recovered from the pandemic shock. The recovery in these sectors remains patchy,” said Soumya Kanti Ghosh, group chief economic adviser at State Bank of India.
Eco making swift recovery, expansion hit by 3rd wave
The economy has been scripting a swift recovery after the bruising impact of the Covid-19 restrictions across the country. The third wave of the pandemic has also hurt expansion and economists said the NSO’s implicit GDP growth of 4.8% in the fourth quarter appears to be optimistic given the impact of the third wave on contact intensive services sectors and the impact of high commodity prices on inflation triggered by Russia’s invasion of Ukraine.
Finance minister Nirmala Sitharaman has said that economic recovery in India and globally is being threatened with disruptions to the value chains by war, but hoped that peace would be restored at the earliest. “With global oil prices now expected to remain above $100 per barrel until the early stages of H2 ( second half) 2022, due to Russia’s invasion of Ukraine, and other commodity prices also pushing higher, India’s growth is likely to remain relatively subdued throughout most of 2022,” according to a note by Oxford Economics.
HDFC Bank said that the performance of private consumption expenditure for the full year was a positive trend. Growth has been revised up to 7.6% in FY22 from the earlier advance estimate of 4.1%.


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