GDP growth at 7.1% seems disappointing

Capitalstars Financial Research pvt. ltd.

GDP growth for second quarter 2018-19 at 7.1 per cent seems disappointing. Manufacturing growth at 7.4 per cent and agriculture growth at 3.8 per cent is steady. Construction at 6.8 per cent and mining at minus 2.4 per cent reflect monsoon months deceleration," he said in a tweet.

"First half GDP growth is at 7.6 per cent and is quite robust and healthy. Still the highest growth rate in the world," he said.

His remarks came after the official data released on Friday showed that the pace of India's Gross Domestic Product (GDP) growth slowed during the second quarter of 2018-19 to 7.1 per cent from 8.2 per cent in the first quarter. It was 6.3 per cent in the corresponding period of the previous fiscal.

2QFY19 GDP missed consensus slightly despite favourable base effects, with the slowdown concentrated in consumption on the expenditure-end. Farm sector performance and non-public admin sectors have been a drag on sectoral breakdown. The softer 1HFY growth pace will reinforce expectations that March 2019 growth will be sub-7 percent by the March 2019 quarter, with full-year real GDP growth to be close to 7 percent."

"Easing inflation and a wider output gap will see the central bank pause in December and the rest of FY19. The likelihood and scale of policy tightening in FY20 hinge on external developments, particularly rupee and oil.

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