India GDP Q4 2019

India: Growth slows to near seven-year low in October–December

In the third quarter of fiscal year 2019, which ran from October to December, the economy expanded 4.7% year-on-year, down from the revised growth of 5.1% in July–September (previously reported: +4.5% year-on-year) but matching market analysts’ expectations. The reading represented the weakest expansion since January–March 2013.

Fixed investment sank 5.2% in Q3, even sharper than Q2’s 4.1% decrease, likely due to slowing bank lending growth. A slowdown in government consumption growth also weighed on the overall reading in Q3, although it still climbed 11.8% (Q2: +13.2% year-on-year). In contrast, private consumption growth accelerated to 5.9% in Q3 from 5.6% in Q2 as consumers become more confident about future economic conditions.

On the external front, exports of goods and services fell 5.5% in Q3, down from the 2.1% drop in Q2. Meanwhile, imports collapsed 11.2% in Q3, reflecting weak domestic demand, after falling 9.4% in Q2. Overall, the external sector contributed 1.1 percentage points to economic growth in Q3, down from the 1.4 percentage-point contribution in Q2.

Commenting on the outlook, analysts at Nomura said: “We do not expect any material growth improvement in [January–March] as domestic credit conditions remain weak and because the impact of COVID-19 is likely to be a headwind”.

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