New Delhi, India (4E) – India’s second-quarter economic growth slowed down as industrial output declined, adding to the problems for Asia’s third-largest economy, which is already struggling with rising inflation and the plunging rupee.
Gross domestic product (GDP) climbed 4.4 percent in the quarter ended June from a year ago, compared with 4.8 percent recorded in the previous three months, according to the Statistics Ministry report released Friday in New Delhi. In a survey by Bloomberg News, economists called for a 4.7 percent growth.
This year, the rupee has lost ground against the U.S. dollar, falling 16 percent as India’s record current-account deficit made the country vulnerable to capital outflow from emerging markets, driven by the possibility that the U.S. monetary stimulus will be scaled back.
The Reserve Bank of India raised rates last month in an effort to support the falling rupee and contain inflation, but risked holding back economic expansion even as Prime Minister Manmohan Singh pledges to boost investment.
The premier spoke in Parliament on Friday before the release of the latest data, trying to reassure investors, adding that growth would pick up later this year and promising policies that will attract foreign investment.
Mr. Singh forecasts annual GDP growth rate of 6 percent to 8 percent in the next two or three years.
For the second quarter, private consumption growth slowed to 1.6 percent from the previous year, and compared with the 3.8 percent increase in the previous quarter, according to Friday’s report. Investment fell 1.2 percent, while government spending increased 10.5 percent.