India: Economy slows
November 28, 2014
India’s economy decelerated in the second quarter of fiscal year 2014/2015, raising doubts about the government’s ability to revive the economy. GDP increased 5.3% in the July-September period over the same quarter last year, which marked a slight deceleration over the 5.7% expansion registered in the previous three-month period. Growth was modestly above the 5.1% growth rate the market had expected.
The quarterly slowdown reflected that growth in the all-important manufacturing sector was virtually stagnant, marking a notable deterioration over the 3.5% increase observed in the April-June period. Agriculture slowed from a 3.8% increase in Q1 FY 2014/2015 to a 3.2% rise in Q2 FY2014/2015 as a result of a weak farming harvest due to a bad monsoon. Meanwhile, the production of electricity, gas and supply of water grew 8.7% in Q2, below the 10.2% rise tallied in Q1.
Author: Ricardo Aceves, Senior Economist