India: Economy expands at slowest pace in a decade in the fiscal year 2012/13
May 31, 2013
In the January-March period - the fourth quarter of the fiscal year 2012/13 - GDP increased 4.8% over the same period last year. The reading marked a slight improvement compared to the revised 4.7% expansion registered in the three-month period to December and was in line with market expectations.
The quarterly print showed that the all-important manufacturing sector expanded 2.6% in the final quarter of the fiscal year 2012/2013, slightly up from the 2.5% increase recorded in the preceding quarter. In addition, construction activity gained momentum in the three month-period to March and expanded 4.4% (Q3 2012/13: +2.9% year-on-year). Meanwhile, agriculture grew 1.4% (Q3 2012/13: +1.8% yoy), while financial services increased a whopping 9.1% (Q3 2012/13: +7.8% yoy).
In the full fiscal year 2012/13, the economy expanded 5.0%, which marks a deceleration over the 7.0% increase registered in the fiscal year 2011/12. The annual reading represents the weakest expansion in a decade.
The government predicts the economy to expand between 6.1% and 6.7% in the current fiscal year. The Reserve Bank of India expects GDP growth to reach 5.5%.
FocusEconomics Consensus Forecast panellists cut their growth forecast for the fiscal year 2013/14 and now expect GDP to grow 5.9%, which is down 0.1 percentage points from last month's forecast. For the fiscal year 2014/15, the panel sees economic growth at 6.8%.
Author: Ricardo Aceves, Senior Economist