India Macro Weekly: Economy grows at slowest pace in 7 quarters
For the week ending March 4, 2017:
A slew of data releases for the Indian economy showed a mixed picture. Economic growth slowed down to 6.6% in Q3, 2016-17; the slowest in seven quarters and growth for the previous quarters was revised below 7% as well suggesting that the economic pain has been deeper than the initial estimates suggested.
A strong agriculture season continued to hold up growth, which has been hit in some pockets, possibly on account of the demonetisation drive.
On the expenditure side, strong government spending lifted overall expenditure, though private final consumption expenditure was also strong; in line with what was suggested by the latest reading for the Orbis Economics Consumer Conditions Measure, a leading index for the consumption economy.
Initial data for Q4, 2016-17 showed a softening in core industry growth to 3.4% in January 2017, while foreign exchange earnings showed robust growth of 16.3% during the month.
Indian companies’ are still diffident picking up domestic credit, though external borrowings strengthened, as per January 2017 numbers. Numbers for sectoral deployment of domestic credit showed that industry borrowings are still very weak, while personal loans continue to be robust. On the external borrowings front, January numbers came in at USD 1.8bn, which is the third highest level in 2016-17 so far.
The Orbis Economics Exchange Rate Index showed a depreciation in the EUR to below its average 2015-16 levels, while the USD remained somewhat appreciated the level and the GBP remained firmly below it.
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