Indian economy set for more strong growth
Monday, 3 September 2007
NEW DELHI, Sept 2 (AFP): India looks set for another year of strong growth after the economy unexpectedly accelerated by a scorching 9.3 per cent during the first three months, analysts say.
The first-quarter data, driven by robust manufacturing and services output, surprised many analysts who had forecast growth as low as 8.5 per cent after five interest rate hikes in a year.
The aggressive monetary tightening and a stronger rupee, which has hit exports, means it is unlikely India will repeat last year's torrid 9.4 per cent expansion, the fastest in 18 years, analysts say.
But India's "growth story," which has prompted foreigners to pump billions of dollars into shares, infrastructure and other investments, remains intact.
Expansion is being "consumption led" with "rising incomes and a growing middle class" in the country of 1.1 billion people, said Deepak Lalwani, director at London investment house Astaire and Partners.
"The economy has gained its own strong momentum due to cumulative reforms," said Lalwani, who sees growth of 8.5-9.0 per cent in the fiscal year to March 2008.
Agriculture, which has pulled down the broader economy, also fared better than expected during the first quarter, posting 3.8 per cent growth.
While nine per cent is at the upper end range of most full-year forecasts, economists have raised their expectations following the quarterly figures.
The first-quarter data, driven by robust manufacturing and services output, surprised many analysts who had forecast growth as low as 8.5 per cent after five interest rate hikes in a year.
The aggressive monetary tightening and a stronger rupee, which has hit exports, means it is unlikely India will repeat last year's torrid 9.4 per cent expansion, the fastest in 18 years, analysts say.
But India's "growth story," which has prompted foreigners to pump billions of dollars into shares, infrastructure and other investments, remains intact.
Expansion is being "consumption led" with "rising incomes and a growing middle class" in the country of 1.1 billion people, said Deepak Lalwani, director at London investment house Astaire and Partners.
"The economy has gained its own strong momentum due to cumulative reforms," said Lalwani, who sees growth of 8.5-9.0 per cent in the fiscal year to March 2008.
Agriculture, which has pulled down the broader economy, also fared better than expected during the first quarter, posting 3.8 per cent growth.
While nine per cent is at the upper end range of most full-year forecasts, economists have raised their expectations following the quarterly figures.