CRISIL Research has come out with its report on "GDP growth slips below 2008 crisis level" based on GDP data released for the 4QFY12.
GDP growth reached a record low of 5.3 % in the 4QFY12, dragging the overall FY12 GDP growth to 6.5 %. This is significantly lower than the advance estimates of 6.9 % released earlier and is also lower than the 6.7 % GDP growth witnessed in FY09 after the global financial crisis. Industry continues to be the most stressed sector as it grew at a mere 3.4 % in FY12, mainly due to the degrowth in mining and tepid growth in manufacturing sector. Though the services sector grew at a robust 8.9 % in FY12, its growth has fallen below 9 % mark for the first time since 2004-05. Private consumption growth dropped sharply to 5.5 % in FY12 as compared to 8.1 % in FY11. Hurt by the policy logjam investment demand dropped to 5.5 % in FY12 as against 7.8 % in the previous fiscal. Further, exports growth also dropped to 15.3 % in FY12 as against 22.7 % in FY11 due to weak global environment. Our GDP forecast for FY13 although is currently at 7.0 %, we are in the process of revising it due to significant increase in downside risk to GDP and would be releasing the same next week.
High base kept the agricultural output growth muted at 1.7 % in the 4QFY12. However, record output levels have been achieved for the rabi crop this year.
Industrial growth continued to be impacted by weak domestic demand, policy logjams and global uncertainty in 4QFY12. Manufacturing activities got severely impacted and the sector contracted in the reporting quarter. Though the mining sector posted a positive growth of 4.3 %, after being in the negative zone for the past two quarters, this was mainly because of a low base.
Services growth dropped to 7.9 % in 4QFY12, as the weak domestic and global environment pulled down the growth of trade, Hotels, Transport & Communication sector.
Fixed investment growth recovered to 3.6 % in 4QFY12 after being in the negative zone for the past two quarters.
Government consumption expenditure growth reduced further to 4.1 % in the 4QFY12. Although exports growth in 4QFY12 has remained healthy, import growth at only 2 % indicate substantial demand slowdown.
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