India's annual economic growth is expected to have slowed in Dec quarter

[TakeNoBS]

India's annual economic growth is expected to have slowed to 5.0 percent in the three months to December due partly to a struggling farm sector, having already struck a near three-year low of 5.3 percent in the previous quarter, according to a Reuters poll.

Forecasts of growth in gross domestic product for the October-December quarter ranged from 4.5 percent to 5.6 percent in the poll of 36 economists.

The latest GDP data is due to be released at 0530 GMT on Thursday, shortly before Finance Minister Palaniappan Chidambaram announces the 2013/14 budget.

"The biggest factor this quarter will be a slow pace of growth in agricultural output from the impact of the less-than-normal monsoon in the summer months," said Yuvika Oberoi, economist at Yes Bank.

"In addition, the industrial production numbers showed a tepid pace of improvement and the slowdown in the services continued. We also saw government spending has been much lower than the norm in a bid to rein in the fiscal deficit."







Once considered a rising star in Asia, the Indian economy has lost its shine in recent years. Preliminary estimates released earlier this month showed growth dwindled to an annual five percent rate in the current fiscal year to March.

That would be the slowest growth rate in Asia's third largest economy in a decade and if confirmed, underscores the need for further policy reforms and monetary easing to spur investments, say economists.

The Reserve Bank of India has said that halting the loss of momentum in the economy is a priority for policymakers, as the country needs higher growth to provide jobs for its burgeoning population, and stronger capital inflows and export earnings to reduce its external deficits.

A separate Reuters poll taken last week showed Chidambaram is expected to present an austere budget to bring the country's wide current account deficit under control and lure foreign investment.

But, while compelled to make spending cuts needed to bring the fiscal deficit under control and stave off a potential downgrade in India's sovereign debt credit rating to junk bond status, there are also expectations that Chidambaram will find ways to encourage investment and growth.

Spending cuts, however, will inevitably place a drag on the economy. Chidambaram cut public expenditure in the current fiscal year to March by some nine percent from the original target, and growth will have suffered during the October-December quarter due to reductions in spending on welfare, defense and road projects.

"If there are going to be any austerity measures or fiscal consolidation, that will be negative for growth in the short term. But, I think the government is not going to take a very skewed view," said Radhika Rao, economist at DBS. "They cannot look at growth alone at this point."

After it cut its policy interest rate for the first time in nine months January, the RBI also warned any monetary easing would depend on how quickly the high current account deficit and inflation could be reined in.

The RBI cut its repo rate by 25 basis points to 7.75 percent and revised its GDP growth forecast for to 5.5 percent from 5.8 percent for the fiscal year ending in March.

India GDP growth expected to have slowed further in Dec quarter | Reuters

The Indian economy still had not recover yet according to this article.

 

[IndoCarib]

India Economic Survey: Downturn Nearly Over - WSJ.com

Indian economy is at a turning point: Raghuram Rajan

 

[kawaraj]

I would put the annual number at 5.0 percent after adjustment. This is better than I expected of a 4 percent growth rate.

 

[AADHAAR]

Forex Flash: What was real Chinese GDP growth in 2012? - Standard Chartered

Stephen Green of Standard Chartered Global research questions whether China´s official GDP announcements are reliable or actual GDP growth is closer to 5.5%.

Green begins by commenting that if there was an index for suspicion about China´s official statistics, it would be off the chart. While the global financial crisis added plenty of statistical smog, the issue with Chinese data is not new but scepticism has to be reasonable deployed as some numbers are better than others and the problems vary across different data sets.

He notes that headline statistics are particularly important. He writes, "The government has very clear annual GDP targets, and these numbers hit newspaper headlines. We believe the GDP numbers, especially the first prints, are possibly subject to smoothing at times of super-fast or unusually slow growth. We have previously explored various proxies to track the industrial and investment cycle (electricity, freight, diesel, and concrete production, for instance)."

Green notes that consumption is trickier to monitor, though he does like "KFC same-store, car and Hong Kong retail sales, to name a few proxies." Across the board, he notes that the proxies told the same story from Q3-2011 onwards: an economy slowing significantly through to Q3-2012, before those shoots did their green thing in Q4. The official y/y GDP numbers, however, attempt to tell a different story: pretty stable growth. The official q/q numbers suggest that Q3 was actually the strongest quarter in 2012.

Questioning why this is the case, he notes that one e hypothesis is that there is a problem with the GDP deflator, i.e., the number that is used to measure overall inflation and that gets us from nominal to real growth. He cites two studies which conclude that service-sector inflation is underestimated within the GDP deflator. Considering Chinese inflation, he feels that it is not too bad, despite still having some obvious issues however.

Overall, he notes that growth boomed in 1992 with Deng Xiaoping‟s revival of reform, but then slowed sharply with Zhu Rongji‟s retrenchment policies of the mid-1990s. The economy was further weakened by domestic restructuring and the Asian Financial Crisis in 1997-98. Then, with the state-enterprise reforms of the mid-1990s feeding through, China‟s entry into the WTO in 2001, and strong global growth, China‟s economy took off again in 2001, peaking out in 2007.

From that point Green notes that growth has slowed considerably since the height of the stimulus. he writes, "Our guesstimates for the past two years look considerably weaker than the official estimates: our guesstimates for 2011 and 2012 are 7.2% and 5.5%, respectively, compared with the official prints of 9.3% and 7.3%." He continues to explain that "When we say guesstimates, that is exactly what we mean. We have to use official data to question official data; we do not have access to an independent nationwide assessment of service-sector inflation, and it requires a leap of faith to choose the alternative services series we have."

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china growth rate = 5.5%

CPC announces = 7.8%

 

[TakeNoBS]

Forex Flash: What was real Chinese GDP growth in 2012? - Standard Chartered

Stephen Green of Standard Chartered Global research questions whether China´s official GDP announcements are reliable or actual GDP growth is closer to 5.5%.

Green begins by commenting that if there was an index for suspicion about China´s official statistics, it would be off the chart. While the global financial crisis added plenty of statistical smog, the issue with Chinese data is not new but scepticism has to be reasonable deployed as some numbers are better than others and the problems vary across different data sets.

He notes that headline statistics are particularly important. He writes, "The government has very clear annual GDP targets, and these numbers hit newspaper headlines. We believe the GDP numbers, especially the first prints, are possibly subject to smoothing at times of super-fast or unusually slow growth. We have previously explored various proxies to track the industrial and investment cycle (electricity, freight, diesel, and concrete production, for instance)."

Green notes that consumption is trickier to monitor, though he does like "KFC same-store, car and Hong Kong retail sales, to name a few proxies." Across the board, he notes that the proxies told the same story from Q3-2011 onwards: an economy slowing significantly through to Q3-2012, before those shoots did their green thing in Q4. The official y/y GDP numbers, however, attempt to tell a different story: pretty stable growth. The official q/q numbers suggest that Q3 was actually the strongest quarter in 2012.

Questioning why this is the case, he notes that one e hypothesis is that there is a problem with the GDP deflator, i.e., the number that is used to measure overall inflation and that gets us from nominal to real growth. He cites two studies which conclude that service-sector inflation is underestimated within the GDP deflator. Considering Chinese inflation, he feels that it is not too bad, despite still having some obvious issues however.

Overall, he notes that growth boomed in 1992 with Deng Xiaoping‟s revival of reform, but then slowed sharply with Zhu Rongji‟s retrenchment policies of the mid-1990s. The economy was further weakened by domestic restructuring and the Asian Financial Crisis in 1997-98. Then, with the state-enterprise reforms of the mid-1990s feeding through, China‟s entry into the WTO in 2001, and strong global growth, China‟s economy took off again in 2001, peaking out in 2007.

From that point Green notes that growth has slowed considerably since the height of the stimulus. he writes, "Our guesstimates for the past two years look considerably weaker than the official estimates: our guesstimates for 2011 and 2012 are 7.2% and 5.5%, respectively, compared with the official prints of 9.3% and 7.3%." He continues to explain that "When we say guesstimates, that is exactly what we mean. We have to use official data to question official data; we do not have access to an independent nationwide assessment of service-sector inflation, and it requires a leap of faith to choose the alternative services series we have."

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china growth rate = 5.5%

CPC announces = 7.8%

And you may be right. What China would do is over report it during economic retraction. Under report it during expansion. So a 10 year growth would be accurate. A quarterly growth not so much.

And you know why would China under report during expansion, for taming down inflation risk.