India’s economy grew at its fastest pace in a year in the June quarter, supported by strong services activity and demand, but a drier-than-usual monsoon could limit future growth.
Gross domestic product rose 7.8% year-on-year in the second quarter, beating expectations of 7.7% in the first quarter, beating expectations in a Reuters poll.
The corresponding period in 2022 recorded the highest growth at 13.1%.
India remains one of the fastest-growing major economies, especially with the slowdown in China’s recovery after the coronavirus pandemic.
India’s Chief Economic Adviser V. Anantha Nageswaran forecasts his growth for the full year at 6.5%. “Growth prospects are bright, although external factors pose downside risks,” Nageswaran said.
But most economists warned that drier conditions could hurt growth in the coming quarters.
After the driest August in more than a century, forecasts indicate that September will see average rainfall in India.
Private consumption, which accounts for about 60% of the economy, grew 6% year-on-year in the quarter ended June, compared to 2.8% in the quarter ended March, while manufacturing grew 4.7% compared to 4.5%. In the previous quarter.
But growth in capital formation, an indicator of investment, was 8 percent year-on-year, compared with 8.9 percent in the previous three months.
Retail inflation hit a 15-month high as prices of vegetables and grains rose sharply.
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