GBP/INR continues to grow after India published its long-awaited gross domestic product growth report. Currently, the pair is trading at 92.732, up 0.07% as of 6:30 AM UTC.
India’s economy saw its weakest growth in over six years. Thus, GDP rose only 4.5% in the three months to September compared to the same period in 2018. The previous quarter saw a growth of 5%. The reading is slightly below economists’ expectations, with some rating agencies anticipated GDP growth of 4.7% for the quarter.
The economic performance shows once again that the reforms implemented by Prime Minister Narendra Modi have little effect.
The slowdown is driven by lower consumer spending, business investment, and exports. Reserve Bank of India and the government worked in tandem to stimulate the economy, but without much success.
The RBI has cut the interest rates several times by an aggregate 135 basis points this year to the lowest level since 2009. Economists anticipate more easing measures next week. Elsewhere, the government has cut corporate taxes, merged banks, established a special real-estate fund. The government also initiated the largest privatization scheme in over a decade.
India is obliged to reach economic growth of about 8% a year in order to create enough jobs for the young population that seeks to join the labor market each year. However, many economists agree that the current slowdown would continue for one year or two, calling for urgent reforms.
Kunal Kundu, India economist at Societe Generale in Bangalore, commented:
“At this point in time, direct fiscal intervention and/or cut in personal income tax rates to put in more money in the hand of consumers appears to be the only short-term solution.”
On Saturday, India’s finance minister said that the country would announce a series of infrastructure projects worth $1.39 trillion to boost the economy.
The rupee tries to narrow losses after India’s manufacturing activity rose last month, driven by new orders and output. However, factories were not positive about the future, cutting jobs for the first time since March 2018.
The Nikkei Manufacturing Purchasing Managers’ Index increased to 51.2 in November from 50.6 in October. Analysts expected a decline to 49.8.