India: Third quarter growth beats expectations amid strong growth in services
December 1, 2010
In the July-September period ? the second quarter of the fiscal year 2010/11 ? gross domestic product (GDP) expanded 8.9% over the same period last year. The reading matched the previous quarter's 8.9% expansion (previously reported: +8.8% year-on-year) and overshot market expectations, which had growth softening to 8.2%. The unchanged quarterly reading mostly reflected how a better performance in the services and agriculture sectors offset a deceleration in the industrial sector. Growth in manufacturing output dropped from 13.0% in the first quarter to 9.8% in the second. In contrast, the hotels, trade, transport, and communications sector, which accounts for more than a quarter of total output, added a robust 12.1% (Q1 2010/11: +10.9% yoy), while the financial services, real estate, and business services sector improved to a 8.3% expansion (Q1 2010/11: +7.9% yoy). In addition, the important agricultural sector accelerated from a 2.5% increase in the first quarter to 4.4% expansion in the second. Finance Minister Pranab Mukherjee, recently raised the government's fiscal-year 2010/11 growth forecast to 8.75% from the 8.5% expected earlier. Meanwhile, the Reserve Bank of India anticipates GDP will expand 8.5% this year.