12/7/22, 11:18 AM
India Economic Growth Slows to 6.3% as Inflation, Global Headwinds Weigh – WSJ
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https://www.wsj.com/articles/india-economic-growth-slows-to-6-3-as-inflation-global-headwinds-weigh-11669816887
WORLDASIA
India Economic Growth Slows to
6.3% as Inflation, Global
Headwinds Weigh
A slowing global economy and higher prices are constraining consumer spending
and manufacturing activity
Indiaàconsumers are facing higher prices on energy, food and other goods.
PHOTO: ALTAF QADRI/ASSOCIATED PRESS
By Vibhuti Agarwal
and Shan Li
Nov. 30, 2022 9:01 am ET
Indiaàgross domestic product grew 6.3% from July to September as global pressures on
prices and supply chains, along with economic downturns in the U.S. and European Union,
slowed its economic recovery.
In April to June, the economy grew 13.5% from a year earlier, benefiting from the easing of
covid restrictions, and from a comparison to a quarter in which Indiaàeconomy was hit hard
by a fierce wave of the illness.
Economists said domestic demand for goods and services picked up as people shopped for
Indiaàfestival-packed season, which began in September.
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12/7/22, 11:18 AM
India Economic Growth Slows to 6.3% as Inflation, Global Headwinds Weigh – WSJ
But sluggish manufacturing growth indicates that companies are wary of boosting inventory
when consumers are facing higher prices on energy, food and other goods. Indiaàfactory
output declined by 0.8% in August, before rebounding slightly by 3.1% in September,
according to official data. Wednesdayàdata showed manufacturing shrank 4.3% in the
quarter from a year earlier.
anufacturers did not see demand to be substantial enough to crank up their activities to
meet with higher festival demand,3aid Kunal Kundu, an India economist at the Soci)
G©rale. (at was a reflection that business is not very sure of the strength of the recovery
process.’etail inflation in India has eased slightly in recent months, but still came in at 6.77% in
October, according to the National Statistical Office. That is the 10th consecutive month
where inflation breached the Reserve Bank of Indiaàupper limit of 6%.
Economists said the interest-rate increases implemented by the central bank have helped
combat inflation, but have also pushed more companies to delay borrowing for projects, and
led some consumers to put off large purchases such as homes.
t was necessary, and a slowdown is only to be expected,3aid Mr. Kundu. But most of the
slowdown, he added, is directly related to conomic scarring&rom the pandemic.
Total nationwide employment remains persistently below prepandemic levels. Surveys from
the Centre for Monitoring Indian Economy, an independent think tank in Mumbai, show the
economy is down nearly 12 million jobs compared with 2019. Many of those who held on to
jobs are dealing with wage cuts that have remained in place after businesses reopened and
economic activity resumed.
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12/7/22, 11:18 AM
India Economic Growth Slows to 6.3% as Inflation, Global Headwinds Weigh – WSJ
October was the 10th consecutive month where Indiaàretail inflation breached the central bankàupper limit.
PHOTO: INDRANIL MUKHERJEE/AGENCE FRANCE-PRESSE/GETTY IMAGES
Many economists said they don expect food or fuel prices to fall dramatically, which will cut
into peopleàability to spend and hurt the small to medium-size businesses that are the
backbone of the countryàeconomy.
Aurodeep Nandi, an economist with Nomura in Mumbai, said industry and services activity
have now moderated as pent-up demand faded and financial conditions tightened for many in
India.
The International Monetary Fund in October lowered IndiaàGDP growth for the current
financial year to 6.8% from the earlier 7.4%, citing the impact of a slowing global economy,
inflation, rising interest rates and the war in Ukraine. India recorded economic growth of 8.7%
in the year ended March 31.
Indiaàexports contracted by 16.7% to $29.8 billion in October compared with the same month
a year earlier, trade data showed. ïntraction in exports in the postpandemic phase attests
to the increasingly challenging global environment, and Indiaàsensitivity to this global
slump,3aid NomuraàMr. Nandi.
Write to Vibhuti Agarwal at vibhuti.agarwal@wsj.com and Shan Li at shan.li@wsj.com
Appeared in the December 1, 2022, print edition as ‘Global Headwinds, Inflation Hamper IndiaàRecovery’.
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