Strengthening services sector, moderation in inflation rate drive6th consecutive monthly uptick
ZyFin Research, a leading financial research and analytics company, today announced its estimate of monthly GDP growth - a barometer of India's economic health. At 5.7% in December 2013 (year-on-year [YoY]), the monthly GDP has moved up from 5.4% in November 2013to reach its highest level since December 2011.This uptick is driven by strengthening services sector and moderation in inflation. ZyFin estimates that GDP grew by 5.5% in Q3 of 2013-14, the highest growth rate since Q4 2011. The Central Statistical Organisation (CSO) is scheduled to announce its estimate on February 28, 2014.The key highlights of the Monthly GDP Growth Indicator for December 2013 are:
ZyFin Research estimates GDP growth at 5.7% for December 2013,ascompared to December 2012. The corresponding GDP growth estimate for November 2013 was 5.4%.
This uptick was driven by a 6.1% growth (YoY) in services sector
This is the sixth consecutive uptick in monthly GDP growth, from a low of 4.1% in June 2013.
December MoM seasonally-adjusted growth was 5.7% (as compared to November 2013).
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Inflation, as measured by the GDP Deflator, declined marginally, to 7.3%, from 7.4% in the previous month. The GDP deflator is a more comprehensive measure of underlying inflation and is widely used in developed economies.
The inflationary situation, while still worrying, has moderated over the past four months.
ZyFin believes that the economy has bottomed out and growth rates would continue to improve driven by improving private consumption and expanding industrial activity. ZyFin's Consumer Outlook Index, India's only barometer of consumer sentiment, is at its highest since December 2012. Along with this, ZyFin Business Cycle Indicator, which predicts IIP, is pointing to expansion in industrial activity since January 2014.
Commenting on the December GDP numbers, Dr. Surjit S Bhalla, Senior Advisor, ZyFin Research, said, As emphasized in last month's report, the big story in India continues to be inflation. After being sensationally high over the past six years - a double-digit 10% average - there are consistent signs that inflation is falling at a rate faster than that envisaged by the RBI. While it has targeted headline inflation of 8% for the end of 2014, all indications are that inflation will be below that level by May 2014.
Adds Debopam Chaudhuri, VP Research, ZyFin Research, GDP growth should continue to recover in the following months, with private spending, which accounts for over 50% of India's GDP, expected to rise. ZyFin's monthly Consumer Outlook Index has been indicating a consistently healing consumer sentiment, which would shortly be reflected in a rise in aggregate demand in the economy.
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