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India: Economy slows in October-December quarter

February 9, 2015

India’s economy decelerated in the third quarter of fiscal year 2014/2015, expanding 7.5% over the same quarter of the previous year. The result marks a deceleration over the upwardly revised 8.2% expansion (previously reported: +5.3% year-on-year). The government revised the previous data series to reflect new methodology and a change in base year. The revision resulted in a sharp upward adjustment of the data for the first and second quarter of fiscal year 2014/2015, which has raised doubts over the underlying trend.

The quarterly slowdown came on the back of a deterioration in domestic demand. Private consumption slowed from 8.7% growth in the second quarter of fiscal year 2014/2015 to 3.5% in the third quarter. Growth in fixed investment also decreased, from 2.8% in Q2 FY 2014/2015 to 1.6% in Q3. However, government consumption expanded a notable 31.7% (Q2 FY 2014/2015: +5.8% yoy).

On the external side, exports contracted 2.8%, which was above the previous quarter’s 3.9% decrease. While imports moderated slightly, growing 1.1% (Q2 FY 2014/2015: +1.2% yoy). As a result, the external sector’s net contribution to growth improved from minus 1.4 percentage points in Q2 FY 2014/2015 to minus 1.0 percentage points in Q3 FY 2014/2015.

For the full fiscal year 2014/2015, the government estimates that the economy will expand 7.4%. This represents a significant acceleration over the revised 6.9% increase for the fiscal year 2013/2014 (previously reported: +5.8%).

Forecasters polled by FocusEconomics expect GDP to grow 5.3% in fiscal year 2014/2015, which is unchanged from last month’s forecast. For fiscal year 2015/2016, the panel sees economic growth at 6.1%.


Author: Angela Bouzanis, Senior Economist

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India GDP Q4 2014

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


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