Indian economy probably grew at its fastest pace annually in the April-June quarter, quoting economists Reuters said on Wednesday.
According to the report, the economists are expecting the pace to slow down sharply this quarter and in the next two as well as higher interest rates hit economic activity.
A Reuters poll revealed that gross domestic product (GDP) in the three months to June 30 was probably 15.2 per cent higher than a year earlier. January-March GDP was up 4.1 per cent on a year before.
The last time India’s GDP achieved higher annual growth was in April-June 2021, when it was 20.1 per cent higher than the pandemic-depressed level of a year before.
Forecasts for the latest quarter ranged from 9.0 per cent to 21.5 per cent. The official release is due at 5.30 pm on Wednesday.
The Reserve Bank of India (RBI) has raised its benchmark repo rate by 140 basis points since May, including 50 basis points this month, while warning about the impact of a global slowdown on domestic growth prospects.
The latest Reuters poll showed the economists expected growth this quarter could slow sharply to an annual 6.2 per cent before decelerating further to 4.5 per cent in October-December.
Many economists expect another rate hike of about 50 basis points next month, followed by one more of 25 basis points thereafter.
Consumer spending, which accounts for about 55 per cent of economic activity, has been hit hard following a rise in prices of food and fuel, though monthly inflation has moderated in the past three months.
The report mentioned sales of two-wheelers are an indicator of the health of the economy. In April-June they were 50.3 lakhs units, higher than in the same periods of 2021 and 2020 but nearly one-fifth lower than in 2019, industry data showed.
According to economists, such frequently available indicators show India’s economy is so far holding up well to worsening conditions.
“More timely data suggest that resilience has continued in Q3 (July-September) too,” said Shilan Shah, India economist at Capital Economics, Singapore, noting that the economy had better resisted the impact of the Omicron wave in January-March than it had coped with the previous wave of pandemic. But the economy faces downward risks, as companies’ investment plans could be impacted by tighter monetary conditions and higher input costs, Shah said.
A decline in the rupee of more than 7 per cent against the US dollar has also made imported items costlier for consumers and businesses.