Moody’s Analytics said India’s domestic economy, rather than trade, is its primary engine. (file)
New Delhi:
moody’s analytics todaySaid that India’s domestic economy, rather than trade, is the primary engine of its growth and that the slowdown in economic activity late last year would be only temporary.
Government data released last week showed India’s gross domestic product (GDP) growth slowed to a three-quarter low of 4.4 per cent in October-December 2022, mainly due to contraction in manufacturing and lower private consumption expenditure. Is.
While the manufacturing sector declined by 1.1 per cent in the October-December quarter of the current financial year, private consumption expenditure declined by 2.1 per cent.
In its report on the emerging market outlook, Moody’s Analytics said growth slowed significantly on a year-ago basis, with private consumption lagging behind GDP for the first time since the delta wave of Covid-19 hit the second quarter of 2021. affected the economy.
“We believe the slowdown late last year will be temporary and even salutary, helping to take some of the demand-side pressures out of the economy without coming to a complete halt. On the external front, the US and An early recovery of better growth in Europe will propel India at the mid-year mark,” it said.
The US and Europe are India’s largest trading partners and important destinations for exports of business services.
The deceleration in GDP growth in the December quarter was much lower than the 11.2 per cent growth in the same quarter of the previous fiscal.
In the current financial year, the economy grew by 13.2 per cent in the April-June quarter and 6.3 per cent in the July-September quarter.
Moody’s Analytics said India’s domestic economy, rather than trade, is its primary engine, unlike most other emerging-Asia economies. “With this in mind we observe India’s fourth quarter performance with caution,” it said.
Sectors like manufacturing and agriculture which are heavily linked to private consumption expenditure either contracted or barely grew during the December quarter of the current fiscal.
The normally booming construction and retail and wholesale trade sectors warmed somewhat, although both lagged from earlier this year.
Moody’s Analytics said, “While higher interest rates have slowed the domestic economy and curbed imports, external imbalances have widened, putting pressure on the rupee and raising inflation.”
In the current fiscal year (2022-23), according to official estimates, GDP is projected to grow by 7 percent. For this, around 5 per cent GDP expansion will be needed in the fourth (January-March) quarter.
The economy grew by 9.1 percent in 2021-22. In 2020-21 (the Covid-affected year), the economy shrank by 5.8 per cent, as against growth of 3.9 per cent in 2019-20.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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