Persistent Aggregate Demand Keeps India On Track to World’s Fastest Growth

The economic toll from a deadly second wave of Covid-19 outbreak in India last quarter wasn’t as bad as feared, with the nation still very much on track to achieving the world’s fastest growth this year.

The first signs of it appeared in the economy’s fiscal first-quarter numbers published by the Statistics Ministry Tuesday, which showed gross domestic product advancing 20.1% in the three months to June from a year ago. That was in line with the median forecast for a 21% expansion in a Bloomberg survey of 45 economists.

Data also showed demand remained resilient in the economy with private consumption continuing to account for 55% of growth year-on-year.

The rupee completed its biggest monthly gain since May before the data was released, while stock indexes hit a new high amid optimism about the economy’s strong recovery. Bonds were up slightly.

A better-than-expected manufacturing performance and a milder hit to services, combined with a robust pace of vaccinations, also helped keep the annual growth outlook for the economy steady at 9.2%, according to a Bloomberg survey. That pace will be the quickest among major economies, surpassing China’s 8.5%.