2023-05-31 13:01:01
By Le Figaro with AFP
Posted update
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India’s economic activity grew 7.2% in the fiscal year to March, boosted by a robust services sector and consumption, official figures showed on Wednesday. The Gross Domestic Product (GDP) of the world’s fifth largest economy grew by 6.1% in the first quarter of 2023 compared to the same period last year, according to data published by the National Bureau of Statistics.
These figures are slightly above market expectations, which were expecting around 5.5% in the first quarter of 2023 and 7.0% for the financial year 2022/23. The South Asian country has one of the fastest growth rates among the world’s major economies. In its annual report released on Tuesday, the Reserve Bank of India (Central Bank – RBI) forecast GDP growth of 6.5% for the financial year 2023-24, due to muted inflation risks.
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For its part, the International Monetary Fund (IMF) predicts that the Indian economy will grow by 5.9% for the financial year 2023-24. Daniel Leigh, who heads the IMF’s global economic studies division, said in April that the country was “one of the bright spots in the global economy“. After the Covid crisis, economic growth in India, the most populous country in the world ahead of China according to the UN, had rebounded by 9.1% in 2021/22.
But like other countries, this Asian giant has faced headwinds, including tighter global financial conditions, war in Ukraine and geopolitical tensions. India imports more than 80% of its crude oil needs, and the war in Ukraine has driven up gasoline prices. Despite this, the country of 1.4 billion people has recorded record growth globally, despite uncertainty in financial markets and turmoil in the banking sector.
This strong expansion should benefit Prime Minister Narendra Modi, who is seeking a third term in the 2024 general election. out of breath. In the first quarter of 2023, China’s economy grew 4.5% year-on-year according to its National Bureau of Statistics, while the Washington Department of Commerce said US growth of 1.1% was anemic. .
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“Strong Resistance”
Europe’s largest economy, Germany, slipped into recession earlier this year, and Japan’s growth rose 0.4% in the first quarter of 2023. Analysts say government spending and consumption internal markets have kept India’s economy strong. The World Bank’s director for India, Auguste Tano Kouame, said in April that the Indian economy “continued to show strong resistance to external shocks».
«Despite external pressures, India’s services exports have continued to rise and the current account deficit is narrowing“, he added. Economists said lower crude oil prices at the start of the year, coupled with a booming service sector, boosted growth in the quarter. India’s services sector hit its highest level in nearly 13 years in April, driven by strong output in the finance and insurance sectors, according to S&P’s Purchasing Managers’ Index (PMI) Global India Services.
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Inflationary pressures, which led the RBI to raise interest rates from 4.0% to 6.50% between May 2022 and last February, before pausing in April, have eased in recent months. Consumer inflation fell to 4.70% in April, within the target range of 2.0 to 6.0% set by the Central Bank, compared to 5.66% in March and the peak of 7.79% reached in April 2022.
State Bank of India’s chief economic adviser, Soumya Kanti Ghosh, stressed in a note on Friday that the manufacturing sector is expected to recover, while increased government spending “would enhance job creation and demand».
But analysts have also warned that the unemployment rate, which has risen this year and reached 8.11% in April, according to data from the Center for Monitoring Indian Economy (CMIE), might weigh on the economy. At the Bombay Stock Exchange, the Sensex index ended the session down 0.55%, before the publication of growth figures.
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