GDP growth to slow to 7.2% in Q4 of FY15, says Moody’s

Tribune News Service

New Delhi, May 28

The GDP growth rate in the January-March quarter is likely to fall to 7.2% from 7.5% in the previous period on account of lower production and weak global demand, Moody’s Analytics said today.

It also raised questions on the new GDP data series by the CSO which takes 2011-12 as the base year, saying that new data “is dubious” as it does not align well with other indicators of economy.

As per CSO’s new GDP data, the Indian economy expanded by 6.9% in 2013-14 and for 2014-15 the growth is estimated at 7.4%.

CSO will release its March quarter GDP data tomorrow. For the quarter ended March, Moody’s said the economic growth “will likely show a slowdown to 7.2%, year-on- year, from 7.5% in the December quarter”.

It said, “External headwinds weighed on India’s March quarter GDP. The trade deficit widened, exports fell at double-digit in the opening months of 2015. Mixed global demand is partly to be blamed, while lower global commodity prices are also hurting exporters’ incomes.”

It, however, added that India’s potential growth rate is “likely closer” to 9%.

As regards domestic factors, Moody’s said commercial banks have been reluctant to pass on the interest rate cuts announced by the Reserve Bank.

“High borrowing costs are hurting the business sector, as manufacturing production grinds lower,” it added.