Consumption in India
India - Consumption
Economic growth tumbles to an over six-year low in Q2 FY 2019
In Q2 FY 2019, which ran from July to September, the economy grew 4.6% compared to the same period a year earlier, down from Q1’s 5.0% expansion and a whisker below market analysts’ expectations of 4.7% growth. It also represented the sixth consecutive moderation in economic growth and the weakest reading since Q4 FY 2012.
Fixed investment growth sunk to 1.0% in Q2 (Q1: +4.0%), marking the weakest growth since Q3 FY 2014. This slowdown was likely due to weaker bank lending growth, which moderated to a nearly three-year low, despite recent interest cuts by the Reserve Bank of India. In contrast, private consumption growth accelerated to 5.1% (Q1: +3.1%), despite falling consumer confidence, while government consumption growth surged to 15.6% (Q1: +8.9%).
On the external front, exports of goods and services decreased 0.4% in Q2, contrasting the 5.7% increase in Q1, while imports slumped 7.0% in Q2, contrasting the 4.2% increase in Q1. Overall, the external sector contributed 1.3 percentage points to economic growth in Q2, well up from the 0.1 percentage-point contribution it made in Q1.
Analysts at Nomura reflected: “The key takeaway from the [Q2] GDP data is the sharp slump in domestic demand, cushioned somewhat by government spending, contracting imports, and rather surprisingly, an uptick in consumption growth. Although weaker global growth is a common thread across economies, India’s sharper-than-expected growth slump, despite being a relatively closed economy, suggests that domestic factors have played a bigger role. […] the slowdown reflects a painful convergence of tight domestic credit conditions”.
Looking ahead, analysts at Goldman Sachs noted that they “expect sequential growth to pick up over the course of next several quarters” and “real GDP growth to accelerate from an estimated 5.3% in FY20 to 6.6% in FY21”. This optimism stems from their assessment of future external demand, looser lending conditions and stimulus from the government.
Overall, FocusEconomics Consensus Forecast panelists see the economy growing 6.1% in FY 2019 as a whole, which is down 0.1 percentage points from last month’s forecast. In FY 2020, our panel expects GDP to expand 6.7%.
India - Consumption Data
|Consumption (annual variation in %)||6.4||7.9||8.1||7.0||7.2|
5 years of economic forecasts for more than 30 economic indicators.
India Consumption Chart
Source: Ministry of Statistics and Programme Implementation and FocusEconomics calculations.
|Bond Yield||6.50||-0.04 %||Jan 01|
|Exchange Rate||71.23||-0.09 %||Jan 01|
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February 14, 2020
Consumer prices dropped 0.13% in January compared to the previous month, contrasting the 1.21% increase in December.
February 14, 2020
Merchandise exports decreased 1.7% in January from the same month a year earlier, similar to the 1.8% decrease in December and amounting to a total value of USD 26.0 billion.
February 12, 2020
Industrial production decreased 0.3% in December compared to the same month a year earlier, contrasting the 1.8% increase in November. Industrial output fell due to declines in the manufacturing and electricity generation sectors in December; on the other hand, output rose in the mining sector.
February 6, 2020
On 1 February, the government unveiled its budget for the 2020 fiscal year, which begins in April.
February 6, 2020
The Reserve Bank of India (RBI) decided to leave all monetary policy rates unchanged at its three-day meeting ending on 6 February, as expected by market analysts due to higher-than-expected inflation.