Just following up briefly on this post on India’s industrial output, second quarter GDP results are now out. India grew at an annual rate of 8.9% between April and June, just down a touch from the 9.3% annual rate in the first quarter. This suggests that the economy is slowing slightly, but with higher energy costs and rising interest rates this is not surprising. Also the global economy is definitely slowing, so this downward movement may continue, although I wouldn’t anticipate anything dramatic. The future looks good.
India has maintained its position as the second-fastest growing major economy after China as rising consumer and government spending drove manufacturing output to a six-year high.
Asia’s fourth-largest economy expanded 8.9 percent in the three months to June 30 from a year earlier, after a 9.3 percent gain in the previous quarter, the Central Statistical Organisation said in a statement in New Delhi. The median forecast of 15 economists was for a gain of 8.4 percent.
Wal-Mart Stores Inc. and Carrefour SA, the world’s two largest retailers, are vying to set up in a nation of 1.1 billion people where retail sales are expected to more than double in the next decade as incomes rise. India is stepping up spending on ports, power and other infrastructure to attract more investment in factories and lift manufacturing to a quarter of the economy from the current 17 percent, half China’s level.
“Consumption and infrastructure spending are driving growth,” said Sundaresan Naganath, who manages the equivalent of $2.4 billion in Indian stocks and bonds as chief investment officer at DSP Merrill Lynch Fund Managers Ltd. in Mumbai. “If India is growing at 8 percent with poor infrastructure, then with great infrastructure it can even grow at 12 percent.”