India: GDP growth disappoints in third quarter of FY 2013/2014
February 28, 2014
GDP expanded 4.7% over the same period of the previous year in the October-December period (the third quarter of fiscal year 2013/2014). The result came in below both the 4.8% expansion recorded in the second quarter and the 4.9% increase the markets had expected.
The quarterly deceleration reflected a deterioration in almost all sectors of the economy. The all-important manufacturing sector swung from a 1.0% expansion in Q2 2013/2014 to a 1.9% contraction in Q3 2013/2014. In addition, mining and quarrying decreased 1.6% in the October-December period, which followed the 0.4% contraction registered in the previous quarter. Agriculture expanded 3.6% in Q3 2013/2014, although the pace was slower than in Q2 (Q2 2013/2014: +4.6% year-on-year), while construction increased a lackluster 0.6% in Q3 (Q2 2013/2014: +4.3% yoy). The only sector that recorded a notable improvement over Q2 was the financial services sector, which expanded 12.5%.
The government expects growth of 4.9% in the FY 2013/2014. For FY 2014/15, the government sees GDP growth around 5.0%. Meanwhile, the Reserve Bank of India Bank expects growth to increase to between 5.0% and 6.0% in fiscal year 2014/2015. Forecasters polled by FocusEconomics expect GDP to grow 5.3% in the fiscal year 2014/2015, which is unchanged from last month's forecast. For the fiscal year 2015/2016, the panel sees economic growth at 5.9%.
Author: Ricardo Aceves, Senior Economist