MUTED GROWTH IN INDIA

INDIA GDP FIGURES SET TO DEEPEN GLOOM

AFP

The Business Times, August 29, 2012

MUMBAI - India is set to announce dismal new economic growth figures on Friday, with expansion in the April-June quarter forecast at near nine-year-lows.

"The numbers will be bad," Siddhartha Sanyal, chief India economist with Barclays Capital told AFP ahead of the publication of the data, which is expected to deepen the gloom surrounding Asia's third-biggest economy.

"Industrial growth is likely to be flat, inflation is high and it is unclear what the government can do in the next three to six months," Sanyal said.

He forecasts India's gross domestic product (GDP) grew at the same rate as the previous quarter at 5.3 per cent, a high figure by the standards of developed countries but far below the near double-digit growth of much of the past decade.

Leif Eskesen, HSBC's chief India economist predicts the same, saying "growth will be muted due to global headwinds and the lack of structural reforms in India." India's once booming industrial sector is in crisis, with output contracting by a shock 1.8 per cent in June due to high borrowing costs, declining confidence and falling demand.

Overseas investor confidence in the Indian economy is also on the wane, as shown by figures for foreign direct investment (FDI) for the quarter to June which tumbled year-on-year by 67 per cent to $4.43 billion, Global rating agencies like Fitch and Standard and Poor's have lowered their outlook on India's investment-grade rating amid rising worries about the government's deteriorating finances and negative current account.

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