India: GDP decelerates more than expected in Q3
February 28, 2013
In the October-December period - the third quarter of the fiscal year 2012/13 - GDP expanded 4.5% over the same period the previous year, which represents the slowest pace recorded since the January-March period of 2009. The print came in below the 5.3% increase recorded in the previous quarter and undershot market expectations that had the economy growing 5.0%.
The slowdown over the previous three-month period mainly reflected weaker growth in the trade, hotels, transport and communications sector (Q2 2012/13: +5.5% year-on-year; Q3 2012/13: +5.1% yoy), which accounts for over a quarter of total economic output. In addition, construction activity decelerated from a 6.7% increase in the three-month period to September to a 5.8% expansion, while, the mining sector recorded a 1.4% contraction in Q3, the first in over a year. On a positive note, the important manufacturing sector accelerated to a 2.5% expansion (Q2: +0.8% yoy).
The government predicts the economy to expand between 6.1% and 6.7% in the fiscal year 2013/14, following an estimated expansion of 5.0% for the current fiscal year, which will end on 31 March. The Reserve Bank of India lowered its growth projections for this fiscal year and expects GDP growth to reach 5.5%, below its previous 5.8% estimate.
FocusEconomics Consensus Forecast panellists also cut their growth forecast for the fiscal year 2013/14 and now expect GDP to grow 6.2%, which is down 0.1 percentage points from last month's forecast. For the fiscal year 2014/15, the panel sees economic growth at 7.0%.