India’s economic growth accelerates
MUMBAI, India – India’s economic growth accelerated to 9.2 percent in the July-September quarter compared with a year ago, the government said Thursday, bringing it closer to China’s sizzling growth rate.Fueled by a brisk expansion of the services sector and a surge in manufacturing output, India’s gross domestic product expanded at a faster pace than the 8.9 percent growth in the previous quarter.The numbers beat expectations and prompted many analysts to revise their forecasts for the full fiscal year through March 2007.”We are revising our full year growth estimate to 8.4 percent from 7.9 percent,” said Shubhada Rao, chief economist at Yes Bank.If that projection comes true, it would be the fourth straight year of 8 percent-plus growth for India, one of the world’s fastest-growing economies after China, which grew 10.4 percent in the July-September quarter.Some analysts expected GDP growth to moderate through the later part of the year because of high oil prices and a possible slowdown in global demand for Indian exports.But manufactured output rose 11.9 percent during the July-September period compared with 8.1 percent in the same period last year. The growth was mostly driven by a surge in exports.High oil prices have also pushed inflation and interest rates, and many thought that would also impact services such as transportation, banking and trade.But the services sector, which accounts for more than half of India’s GDP, continued to be buoyant. Trade, hotels and transport services expanded 13.9 percent, while financial services business grew 9.5 percent.”The upside surprise relative to our forecast came almost entirely from the unexpected acceleration in service sector activity,” said Rajeev Malik, a Singapore-based economist with JP Morgan Chase Bank.JP Morgan was revising its forecast for India’s economic growth in the current fiscal year to 8.4 percent from an earlier projection of 8 percent, he said.Malik said he expects India’s central bank to hike key interest rates by at least a quarter percentage point in December or January to keep inflation under check. “The Indian economy is not overheating, though the impressive growth momentum is showing some signs of excesses.”The sluggish performance of the agriculture sector, however, remained a concern. During the July-September period, farm output grew just 1.7 percent, sharply down from 4.1 percent in the same quarter a year ago.About two-thirds of India’s 1 billion people live on agriculture and most of them earn less than a dollar a day. They has been left untouched by India’s economic boom over the past decade – which has been driven by the expansion of industry and services.