India has joined China in the front ranks of the world’s fastest growing economies.
It confirmed yesterday that its economy grew strongly in the three months to March and for the financial year ending the same month.
The Indian government said growth jumped to an annual rate of 8.6% in the March quarter, which boosted the financial year growth to 7.4%, ahead of the government forecast of 7.2%.
The government said a manufacturing rebound drove economic in the 2009-10 financial year, while the 4th quarter growth rate was the strongest for two years.
But there’s a cost: inflation is running at 9.6% at the wholesale level, which has already produced two interest rate rises so far in 2010.
In contrast, China’s economy grew 11.9% in the March quarter, with inflation running at 2.8% annual.
From 2003-2008, India saw economic growth averaging 8.8% a year, before slumping to 6.7% in the year to March 2009 as the global recession cut demand for India’s manufactured goods, and then the 2009 monsoon fell far short of normal, in turn boosting food prices, especially the cost of sugar.
The Indian Reserve Bank has lifted rates twice this year, while China has tightened its reserve assets ratio for banks twice and engineered a small rise in market rates to drain liquidity at different times in the past four months.
Indian manufacturing rose 16.3% in the three months through March from a year earlier, compared with a 13.8% gain in the December quarter.
Farm output rose 0.7% from a contraction of 1.8% as the impact of the poor monsoon faded.
Mining grew 14% as oil, coal and iron ore production rose.
The March quarter growth was significantly higher than the revised 6.5% expansion in the December quarter and a long way ahead of the 5.8% annual rate in the March 2009 quarter.
Meanwhile Japan’s industrial output rose 1.3% in April from the previous month in seasonally adjusted terms, government data showed yesterday, falling short of market forecasts for a 2.7% rise.
April marked the second straight monthly gain, after a fall in February, which ended eight straight months of gains.
Japan’s strong export performance is still powering the manufacturing sector.
Inventories were up 0.3% and April production was up 25.9% from the previous April.
But manufacturers told the Ministry of Economy, Trade and Industry they expect their orders to climb 0.4% in May and 0.3% in June, which includes an easing in confidence about the immediate outlook from what it was earlier in the year.
And South Korea’s industrial output grew 19.9% in the year to April, the 10th straight monthly increase.
Statistics Korea said, "Production in April was driven by robust demand for semiconductors and electronics parts, though output of automobiles and others declined".
Output growth slowed from March’s revised 22.5%, but the numbers have remained strong since they went positive territory last July.
Month-on-month output in April rose 0.2%.
Exports rose 30% from the same month in 2009.
The government sees growth rising 5% this year, although private forecasts put growth at closer to 5.5% to 6% this year.
India, South Korea and China are three of our top five exporter destinations.
