India is fastest growing major economy |
India remained the fastest growing major economy in the world last quarter, with growth buoyed by an improved performance in manufacturing and services, a Reuters poll of economists found. Prime Minister Narendra Modi`s ban of high-value currency notes in 2016 had a major short-term impact on demand but private and public consumption has recovered. The median forecast from a poll of 35 economists showed the economy grew 7.1 per cent annually in the first three months of this year. Forecasts ranged from 6.5 to 7.8 per cent. Annual growth was 7.0 per cent in the quarter ending December, and 7.9 per cent in the January-March quarter last year. The demonetization drive barely impacted the economic momentum in the second half of FY`17. Most of the high-frequency indicators showed only a marginal slowdown and were quick to recover. Industrial output rose 2.7 per cent in March from a year earlier, beating the median consensus of 1.5 per cent growth in a Reuters poll.Factory and services activity expanded for most of the first quarter of 2017, rising to a five-month high in March, indicating the effects from demonetization were short lived. This acceleration in economic growth was partly driven by favourable domestic factors, including a significant improvement in the transmission of past central bank policy rate reductions into banks` lending rates, encouraging investment.
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