After two consecutive years of sub-5 percent growth, India’s economy looks to have snapped out of its funk in the April-June quarter, as optimism surrounding the new government drove a pickup in economic activity.
Gross domestic product (GDP) data due out on Friday is expected to show Asia’s third largest economy expanded 5.3 percent on year in the April-June quarter, according to Reuters poll, the fastest pace in two years and up from 4.6 percent in the previous three months.
“The recent upturn in PMIs [Purchasing Managers’ Index], business sentiment indices, strong capital markets, macro stability alongside a stable political climate signal that the slowdown in the growth cycle is behind us,” said Radhika Rao, economist at DBS.
A particular bright spot for the economy has been industrial production as growing confidence among businesses leads to a pickup in demand.
Industrial production – which includes the output of factories, mines and utilities – rose 3.4 percent on year in June following a rise of 4.7 percent a month earlier.