Release of latest GDP data by National Statistics Office Growth is forecast to decelerate further in the October-December 2022 quarter, a slowdown which the government’s Chief Economic Adviser (CEA) has mainly attributed to an upward revision in data for the year-ago period. The GDP grew by 4.4% from the year-ago quarter, a commendable deceleration from the 6.3% pace in the last three months and also the 5.2% growth in the October-December 2021 period. Gross value added (GVA) growth slowed to 4.6% from Q2’s 5.5%, as estimates for manufacturing suggested a continued contraction (minus 1.1%), although the July-September contraction (minus 3.6%) is less than Manufacturing also appears to have contracted sequentially (minus 2.4%). Growth in three out of five service sectors, including the important trade, hotels, transport and communications as well as financial, real estate and professional services categories, also slowed sharply from the second quarter, indicating that demand growth seen in connectivity have been- intensive areas, which were most affected covid-19 pandemic, was starting to subside. On the expenditure front, mainstay private final consumption expenditure lost some momentum with its percentage share in total GDP declining to 61.6% from 63% in the year-ago quarter. That this happened in the traditional festive quarter when consumption spending typically peaks should be a cause for concern and suggests that the sustained pace of retail inflation is undermining deflationary capacity.
The CEA, however, suggested that if the year-ago manufacturing output data used to calculate year-on-year growth had remained unchanged, the sector would have actually registered an expansion of 3.8% instead of a contraction of 1.1%. NSO show estimates. Similarly, they claim that private consumption spending would have registered third quarter growth of around 6% instead of 2.1% as the latest NSO release indicates, if the data before the revision had been used. Still, even at 6%, consumption expenditure growth will lag second quarter’s 8.8% expansion, making it clear that momentum is slowing. Gross fixed capital formation, which reflects investment by businesses in new capacity, contracted sequentially with its share of GDP slipping to 31.8% from 34.2% in the July-September period. With global demand significantly weakened and unlikely to recover through 2023, and potentially adverse weather conditions increasing uncertainty over agricultural production in the coming months, policymakers are doing everything they can to dampen domestic demand. need what they can. As top central bank officials have often pointed out, data revisions inevitably make it very difficult to draw meaningful conclusions, highlighting the challenges of formulating policy solutions.