India’s GDP Growth Falls by Half in September

India has posted annual economic growth of 6.3% in its July-September quarter, less than half the 13.5% growth in the previous three months, as the economy takes its post-pandemic shape.

GDP growth for the full fiscal year, which ends on March 31, is likely to come in at just under 7%, broadly in line with pre-COVID levels for Asia’s third-largest economy.

Economists have cautioned that growth momentum may slow in the December quarter due to higher interest rates and falling export growth. Weakening global demand and tightening financial conditions around the world continue to darken the outlook for the country.

The Reserve Bank of India has raised rates by 1.9% since May of this year and is expected to continue that path when its monetary policy committee meets in early December.

Slowing global growth has also started to hurt India’s exports, which fell 17% over the 12-month period ending in October. The Indian central bank has forecast GDP growth for the 12 months, to March 31, 2023, at 7%, but economists point out that slipping global demand could curtail these predictions.

However, other areas of the economy remain robust, which is good news for investors watching emerging markets like India. Helped by pent-up demand for services, private consumption swelled 9.7% compared with a year ago, while capital formation, a proxy for investment, increased 10% annually.