India expands at fastest pace in over 2 years
By Erika Kinetz |
September 1, 2010, Wednesday
|
Print Edition
Print Edition
INDIA'S economy grew 8.8 percent in the June quarter, its fastest pace in over two years, as good farm and manufacturing output lifted growth back to its pre-crisis trajectory.
Economic doldrums this time last year helped bolster growth rates, which economists say will begin to ease as that effect wears off and central bank rate hikes begin to felt in Asia's third-largest economy.
India's economic growth averaged nearly 9 percent before the Great Recession, which dragged growth this time last year to 6 percent, the last quarter before India's economy began to rebound.
A CNBC-TV18 poll had forecast 8.9 percent growth for the April-June period and yesterday's numbers are unlikely to jolt the central bank from its path of monetary tightening. The Reserve Bank of India has raised key interest rates four times this year in a bid to tame high inflation, but economists say the effect of those hikes has yet to filter out to the real economy.
Yes Bank chief economist Shubhada Rao said she expects interest rates to rise another half percentage point in the coming months. "Inflation concerns would still preoccupy monetary policy. We do see some more tightening left."
Despite the glittering headline numbers - quarterly manufacturing output surged 12.4 percent, record auto sales in July, telephone connections up 36.7 percent in the quarter - economists say consumer demand is narrow and the shadow of global economic uncertainty is curbing capital spending and could disrupt industrial production and credit growth.
"In terms of sustainability, the growth number will settle around 8.5 percent. There will be a deceleration," said Enam Securities.
Economic doldrums this time last year helped bolster growth rates, which economists say will begin to ease as that effect wears off and central bank rate hikes begin to felt in Asia's third-largest economy.
India's economic growth averaged nearly 9 percent before the Great Recession, which dragged growth this time last year to 6 percent, the last quarter before India's economy began to rebound.
A CNBC-TV18 poll had forecast 8.9 percent growth for the April-June period and yesterday's numbers are unlikely to jolt the central bank from its path of monetary tightening. The Reserve Bank of India has raised key interest rates four times this year in a bid to tame high inflation, but economists say the effect of those hikes has yet to filter out to the real economy.
Yes Bank chief economist Shubhada Rao said she expects interest rates to rise another half percentage point in the coming months. "Inflation concerns would still preoccupy monetary policy. We do see some more tightening left."
Despite the glittering headline numbers - quarterly manufacturing output surged 12.4 percent, record auto sales in July, telephone connections up 36.7 percent in the quarter - economists say consumer demand is narrow and the shadow of global economic uncertainty is curbing capital spending and could disrupt industrial production and credit growth.
"In terms of sustainability, the growth number will settle around 8.5 percent. There will be a deceleration," said Enam Securities.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
