Indian GDP Comes In Above Forecasts

The Indian economy is on a roll. Data for 2FQ07 (Jul-Sep'07) once again came in above expectations at 9.2%. This means in 1HF07 the Indian economy has grown above 9%. This is way above all forecasts, which range between 7.9% to 8.3%. This means all these forecasts will be revised upwards.

FY07 is turning out to be a year of positive surprises. Corporate sector profits have been above expectations, and so is GDP growth.

In fact, when I look at the trend in quarterly GDP data, I find the existing GDP forecasts for FY07 rather pusillanimous. The average GDP growth for last 13 quarters is 8.4%. That is more than any forecast for FY07. So were the economists expecting a slowdown?

The surprise element seems to have come from two areas - manufacturing which is has grown at over 11% and trade, which is growing at above 13% as per government data. Trade is rather hard to figure out. Manufacturing will accelerate even further. I expect it to hit 13-14% for a few months at least in another 5-6 months. FY07 could well be a 9% year for overall GDP.