The Indian economy continued to slow in the July-September quarter of 2019. GDP growth reached the weakest rate in more than six years, declining to +4.5% y/y from +5.0% in the previous quarter. The breakdown shows weaknesses in particular in investment and exports. Conversely, public spending accelerated (to +15.6% y/y in Q3 2019, from +8.8% in Q2). Private consumption growth also picked up somewhat (to +5.1% y/y from +3.1%) although it remains well below the pace in previous years. Euler Hermes currently expects India’s GDP to grow by +5.3% in 2019 and +5.8% in 2020. However, the weaker-than-expected GDP released for the latest quarter puts downside risks on these numbers. Stimulus measures are in place, but should take a little time to filter through. The Reserve Bank of India has been easing the monetary policy this year, and is likely to implement further rate cuts. New fiscal policy measures have also been announced to boost private sector investment.
