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India’s Economy Likely Slowed to Annual 6.2% in July-Sept

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India’s Economy Likely Slowed to Annual 6.2% in July-Sept

(CTN News) – After experiencing double-digit growth in the previous quarter, the Indian economy likely returned to a more typical 6.2% annual growth rate in July–September, but weaker exports and investment will restrain future activity, according to a Reuters poll.

Asia’s third-largest economy experienced a 13.5% increase in growth from April to June compared to the same period last year, largely due to the pandemic-control restrictions that had slowed down growth during the same time in 2021.

The economy is expected to slow down even more due to the Reserve Bank of India’s (RBI) interest rate increase to combat inflation that has risen above its target range of 2% to 6%.

The latest quarter’s 6.2% annual growth forecast was slightly less optimistic than the RBI’s 6.3% view, according to a Reuters poll of 43 economists between November 22 and 28. The range of predictions was 3.7% to 6.5%.

According to Kaushik Das, chief economist for India and South Asia at Deutsche Bank, “the exceptionally favorable base of the April-June ’22 quarter is behind us, which will result in a normalization of the year-over-year real GDP growth rate from July-Sept ’22 onward and also make it easier to gauge the true underlying economic momentum.”

Business sentiment has remained largely positive in India despite surveys showing weakening economic activity in most major economies, where central banks are reacting to skyrocketing inflation by raising interest rates.

Although weakest in two years, industrial production rose only 1.5% annually on average last quarter, indicating a significant slowdown in manufacturing activity, a major growth driver.

“Sequential growth in GDP is anticipated, driven by the sustained rebound in the services sector.

Manufacturing and mining are predicted to be detrimental. Exports suffered in Q2 (July-September) due to weaker global demand. “Sakshi Gupta, the head of the India department at HDFC Bank, said there were indications of unequal consumption.

A global slowdown may harm the outlook for the nation’s export businesses, the finance ministry warned on November 24.

The RBI increased its benchmark interest rate from 4.0% to 5.9% in May, and an additional 60 basis points are anticipated to be added by the end of March.

According to Das of Deutsche Bank, the obstacles to GDP “may become more visible” between December and February.

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