India economy tops analyst estimates on robust domestic demand
India continues to be one of the fastest growing major economies, amid western economies being squeezed by high interest rates and energy prices, and a slowdown in China
India's economy topped analyst expectations last quarter on healthy domestic consumption and strong services sector growth.
Gross domestic product rose 7.6% in the three months to September from a year ago, according to government data released Thursday. That's higher than the median estimate of 6.8% in a Bloomberg survey and Reserve Bank of India's projection of 6.5%. India's April-June quarter growth stood at 7.8%.
Steady economic activity will keep India as the fastest expanding major economy in the world. Growth has been resilient despite geopolitical challenges, surging inflation and the RBI's six interest rate hikes since last year.
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The central bank will hold its next monetary policy review on Dec. 8. Strong demand will present a challenge to the monetary authority that's trying to bring down inflation to its 4% target on a durable basis. The RBI kept interest rates unchanged for four policy meetings now but has pledged to act should the situation warrant.
India continues to be one of the fastest growing major economies, amid western economies being squeezed by high interest rates and energy prices, and a slowdown in China.
The pace of growth was slightly slower than the 7.8% expansion India's economy saw in the previous quarter, helped by the comparison with a lower base the previous year.
The manufacturing sector, which for the past decade has accounted for just 17% of the economy, expanded 13.9% year-on-year in the September quarter, compared with a revised 4.7% in the previous three months.
"The buoyant growth is being underpinned by cyclical factors like robust corporate profits, a strong fiscal impulse ... and a boisterous financial sector," said Madhavi Arora, economist at Emkay Global.
Government spending rose 12.4% year-on-year in September quarter compared to 0.7% contraction in the previous quarter, but private consumption growth surprisingly slowed to 3.1% year-on-year from 6%.
Growth in capital formation, an indicator of investment, picked up pace to 11% year-on-year from 8% in the previous three months.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.
