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India: Economy slows in April-June quarter

September 1, 2015

India’s economy lost steam in the first quarter of fiscal year 2015, expanding 7.0% over the same quarter of the previous year. The result was below market analysts expectations of a 7.4% expansion and marked a deterioration over the 7.5% increase tallied in the final quarter of FY 2014.

The quarterly slowdown came on the back of moderating private consumption and a deterioration in the external sector. Private consumption fell from a 7.9% increase in the fourth quarter of FY 2014 to a 7.4% expansion in the first quarter FY 2015. However, government consumption rebounded from a notable 7.9% contraction in Q4 FY 2014 to a 1.2% expansion in Q1 FY 2015. Growth in fixed investment also increased, rising from 4.1% in Q4 FY 2014 to 4.9% in Q1 FY 2015.

On the external side, exports contracted 6.5%, which was a more moderate fall from the previous quarter’s 8.2% decline. Imports also improved, falling 5.4% (Q4 FY 2014: -8.7% year-on-year). Since the improvement in imports outpaced exports, the external sector’s net contribution to growth deteriorated from plus 0.1 percentage points in Q4 FY 2014 to minus 0.3 percentage points in Q1 FY 2015.

Forecasters polled by FocusEconomics expect GDP to grow 7.6% in fiscal year 2015, which is unchanged from last month’s forecast. For fiscal year 2016, the panel sees economic growth at 7.9%.


Author: Angela Bouzanis, Senior Economist

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India GDP Q2 2015

Note: Year-on-year changes of GDP in %.
Source: Ministry of Statistics and Programme Implementation (MOSPI) and FocusEconomics Consensus Forecast.


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