India: Economy expands at slowest pace in nine years
June 6, 2012
The economy continues to show signs of cooling, with GDP decelerating for a fourth consecutive quarter. In the January-March period the final quarter of the fiscal year 2011/12 GDP increased 5.3% over the same period last year, the slowest pace seen in nine years. The reading came in below both the 6.1% expansion observed in the previous quarter as well as market expectations of a 6.1% increase. The deceleration over the previous quarter was mainly due to slower growth in the manufacturing sector, which deteriorated from an already paltry 0.6% year-on-year increase in the third quarter to a 0.3% contraction in the fourth. In addition, the trade, hotels, transport and communication sector which represents over a quarter of the overall economy slowed down to a 7.0% expansion (Q3 2011/12: +10.0% yoy). Finally, the important agricultural sector expanded at a weak 1.7% pace (Q3 2011/12: +2.8% yoy). For the full fiscal year 2011/12, GDP increased 6.5%, a deceleration compared to the 8.4% growth rate recorded in 2010/11. The Central Bank anticipates GDP growth reaching 7.3% this fiscal year, which will end in March 2013, while the government sees the economy expanding 7.6%.