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INDIA GDP – 2Q11 in line, fullyear
growth forecast lowered
India’s 2Q11 GDP grew 7.7% YoY, in line with
expectations and similar to the 7.8% growth in
1Q11. However, 2Q10 GDP was revised down to
8.8% YoY from 9.3%, which should have affected
2Q11 growth. Growth is poised to decelerate further
due to the full impact of the ongoing monetary
tightening and the worsening global backdrop.
Agriculture output grew 3.9% YoY, the slowest pace
in four quarters, while industry’s output grew at
5.1%, the slowest pace in two years. Industrial
performance was pulled down by a disappointing
1.2% rise in construction. The key positive surprise
was the impressive growth of 10% YoY in the
service sector, led by trade, hotels, transport and
communication (+12.8%). Non-agriculture GDP
growth recovered to 8.4% YoY in 2Q11 after
averaging 7.9% in the six months to March due
mainly to the jump in the service sector’s output.
India’s expenditure GDP details are highly
unreliable. Still, for what it is worth, private
consumption moderated to 6.3% YoY in 2Q11
(1Q11: 8%), while GFCF rebounded 7.9% (1Q11:
0.4%). Net exports made a negative contribution of
1.7ppt to the GDP-expenditure (8.5% YoY) in 2Q11,
after two straight quarters of positive contribution.
Strangely, India does not announce the revised data
for all the quarters at the same time. Thus, we have
revised 2Q10 GDP but revisions are not yet
available for the remaining quarters of FY11. Still,
as guided earlier, softening external demand and
domestic factors, including the ongoing monetary
tightening, prompt us to fine-tune our FY12 GDP
growth forecast to 7.3% (from 7.5%) and cut the
FY13 forecast to 7.5% (from 8%).
The latest GDP details are supportive of another rate
hike by the RBI on 16 September. The ongoing
moderation in growth suggests that the RBI will
likely have to cut its GDP growth forecast of 8%,
probably in its midyear review towards end-October.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
INDIA GDP – 2Q11 in line, fullyear
growth forecast lowered
India’s 2Q11 GDP grew 7.7% YoY, in line with
expectations and similar to the 7.8% growth in
1Q11. However, 2Q10 GDP was revised down to
8.8% YoY from 9.3%, which should have affected
2Q11 growth. Growth is poised to decelerate further
due to the full impact of the ongoing monetary
tightening and the worsening global backdrop.
Agriculture output grew 3.9% YoY, the slowest pace
in four quarters, while industry’s output grew at
5.1%, the slowest pace in two years. Industrial
performance was pulled down by a disappointing
1.2% rise in construction. The key positive surprise
was the impressive growth of 10% YoY in the
service sector, led by trade, hotels, transport and
communication (+12.8%). Non-agriculture GDP
growth recovered to 8.4% YoY in 2Q11 after
averaging 7.9% in the six months to March due
mainly to the jump in the service sector’s output.
India’s expenditure GDP details are highly
unreliable. Still, for what it is worth, private
consumption moderated to 6.3% YoY in 2Q11
(1Q11: 8%), while GFCF rebounded 7.9% (1Q11:
0.4%). Net exports made a negative contribution of
1.7ppt to the GDP-expenditure (8.5% YoY) in 2Q11,
after two straight quarters of positive contribution.
Strangely, India does not announce the revised data
for all the quarters at the same time. Thus, we have
revised 2Q10 GDP but revisions are not yet
available for the remaining quarters of FY11. Still,
as guided earlier, softening external demand and
domestic factors, including the ongoing monetary
tightening, prompt us to fine-tune our FY12 GDP
growth forecast to 7.3% (from 7.5%) and cut the
FY13 forecast to 7.5% (from 8%).
The latest GDP details are supportive of another rate
hike by the RBI on 16 September. The ongoing
moderation in growth suggests that the RBI will
likely have to cut its GDP growth forecast of 8%,
probably in its midyear review towards end-October.
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