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India, explained

Forecasts bleak as India's growth continues to slow

After growth dipped to 5.5% last quarter, Morgan Stanley slashed its forecast to 5.1% for the current year.
India economy 2012 9 4Enlarge
An Indian couple shelter under a umbrella as they enjoy heavy rain showers in Mumbai on September 3, 2012. The monsoon rains, a key to India's economy, covered the entire country on July 11 but it was 23 percent below average, officials said amid worries of its impact on two cereal-producing states. (PUNIT PARANJPE/AFP/Getty Images)

Okay, Okay, everybody else would be happy with 5 percent growth. But in India, where economists reckon we need 10 percent just to keep creating enough jobs for the rapidly growing workforce, that number looks awfully bleak.  

India's economy grew just 5.5 percent in the quarter ended June 30, a serious climbdown from last year's 8 percent and only a modest bump up from the 5.3 percent recorded in the previous quarter, according to the Associated Press.

And those numbers include a lot of "jobless growth" from the turnover of real estate, especially in India's major cities, where property prices have skyrocketed.

As the AP puts it:

The economic figures for the April-June quarter released Friday by the government showed that industrial and investment activity had failed to pick up pace while the services sector weakened.

Agriculture grew 2.9 percent compared to 3.7 percent a year ago, while the services sector declined to 6.9 percent compared to 10.2 percent.

Manufacturing grew by a negligible 0.2 percent against 7.3 percent growth in the same period last year.

The only bright notes were in the construction sector, which showed a robust 10.9 percent growth; and financing, insurance, real estate and business service activities, which expanded by 10.8 percent.

Analysts at Morgan Stanley were not amused. 

The investment bank cut India's economic growth forecast for 2012-13 to 5.1 percent on Monday, citing a combination of weak external demand, low private investment and poor government finances, Reuters reported. That's the lowest prognosis yet, though economists at Citi, CLSA, CRISIL have also slashed their forecasts, the agency said.

Morgan Stanley had previously forecast 5.8 percent growth for India in the year ending March 31. 

http://www.globalpost.com/dispatches/globalpost-blogs/india/india-growth-forecast