There ought to have been no surprise — much less the kind of disappointment demonstrated by tanking stock markets — over the release on Friday of GDP growth data for the last quarter of 2012-13 (January-March 2013).

There ought to have been no surprise — much less the kind of disappointment demonstrated by tanking stock markets — over the release on Friday of GDP growth data for the last quarter of 2012-13 (January-March 2013). According to the Central Statistics Office, the economy grew by 4.8 per cent in the last quarter and by just 5 per cent last year. Both figures were widely anticipated. In fact, as far back as February, the CSO had pegged the growth rate for 2012-13 at 5 per cent based on an advance estimate of national income. What has obviously rankled the markets is the formal, statistical confirmation of the 5 per cent GDP growth rate, the lowest in a decade and well below the previous year’s 6.2 per cent. The economy had grown at an average rate of 5.1 per cent during the first three quarters, with the first quarter recording the highest rate of 5.4 per cent and the third quarter the lowest of 4.7 per cent. There was absolutely no reason to suppose that in the remaining part of the year, the economy would somehow break out of the sub-five per cent growth trend that had set in by the middle of last year to lift the annual growth rate to a level of respectability, of say above 5.5 per cent. Even the more optimistic government spokespersons, who have placed so much faith on recent policy changes to revive the economy, expect results to flow only in the first part of the current year (2013-14) at the earliest.

Lead indicators, notably the index of industrial production (IIP) data, have provided no reasons to believe a rebound was under way. Manufacturing, which accounts for a significant portion of the IIP, grew by 1 per cent over the whole year, compared to 2.1 per cent in 2011-12. Motor car sales, now emerging as an important indicator on the demand side, have slumped. Agriculture has fared badly, growing by 1.9 per cent compared to 3.6 per cent in 2011-12. Mining and quarrying have posted negative growth for the second year in a row. This reflects the continuing policy logjam in the face of environmental and legal activism. Government spending has been on the low side and there has been a significant drop in private consumption expenditure in the last quarter. These and other corroborative data — such as the sticky and lacklustre export performance — cast doubts on the belief that the economy has bottomed out and that a recovery is under way. Practically all official growth forecasts for last year are now seen to have been highly exaggerated. Consequently, their initial projections for the current year (2013-14) have been much more realistic, ranging from between 6 to 6.7 per cent. Even those are subject to caveats.

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