Continued strong growth in India
The good times continue to roll in India as well as China. WSJ:
India’s year-on-year economic growth moderated to 9.3% in the April-to-June period, data released Friday by the Central Statistical Organization showed. Gross domestic product expanded 9.6% in the same quarter a year earlier. Economists polled by Dow Jones Newswires on average expected growth at 8.9%, accelerated from 9.1% in the January-to-March period.
The manufacturing sector grew 11.9% and subindexes indicate the services sector also expanded. The manufacturing and services sectors account for more than three-quarters of India’s near one-trillion-rupee ($24 billion) economy.
Finance minister P. Chidambaram said GDP growth was “very satisfactory,” and he expects the economy to grow by close to 9% this fiscal year, which ends March 31. He said the government will ensure that credit continues to flow into productive sectors of the economy so that investment remains “strong and buoyant.”
India’s strong growth — greather than 8.5% for the past four years — has driven wages and the stock market to record levels, prompting many companies to expand capacity to meet surging domestic demand. Analysts expect the central bank to leave interest rates on hold for now, as previous increases are likely to be sufficient to slow industrial growth this year, while a stronger local currency and a slowdown in the U.S. economy are expected to weigh on the services sector.
“We do see some softness in [GDP growth] in the subsequent quarters, led particularly by consumer durables, and the growth numbers for this quarter are unlikely to prompt [further] monetary tightening by the central bank,” said Yes Bank Chief Economist Shubhada Rao.
Since January 2006, the Reserve Bank of India has raised its benchmark lending rate six times by a total of 1.5 percentage points to 7.75%. It has also asked banks to hand over cash reserves equivalent to 7% of their deposits to check inflation and prevent the economy from overheating.
The amazing progress of China and India and their 2.7 billion people over the last 20 years would appear to suggest that such progress is possible nearly anywhere on the planet, given the right government policies and a society accepting of what the modern world has to offer.