Published: Thu, June 01, 2017
Money | By Armando Alvarado

Canada's economy grows 3.7% on annualized basis — NewsAlert

The Canadian economy performed better than expected during the March quarter amid strong consumer spending and business investment.

Blaming demonetisation, the International Monetary Fund had also trimmed India's annual growth forecast by 0.4 percentage points to 7.2 per cent for 2017. The economy was slowing down in the middle of 2016. "Demonetisation made it worse", Chidambaram said.

A Reuters poll of 35 economists, had predicted India's fourth quarter GDP growth at 7.1 per cent.

New Delhi, The Indian economy will grow at 7.5 per cent in the current fiscal, which rate will accelerate to 8 per cent in about four years, U.S. rating agency Moody's said on Wednesday ahead of the release of GDP figures for 2016-17 later in the day.

Credit-rating body ICRA also echoed Chidambaram and asserted that the slowdown in the growth of GDP that had already set was intensified by the note ban.

While the full impact of the note ban is still not known, analysts had expected a pick-up in the fourth quarter as consumers who had held back in the weeks after the cash ban stepped up spending.

GDP growth for Q1 FY2017 had been revised upward sharply to 7.9% from 7.2%. During the third quarter ended December, India's GDP grew at 7 per cent.

The Year-on-Year growth in gross fixed capital formation recorded a sharp deterioration over the course of FY2017, culminating in a 2.1 percent contraction in Q4 FY2017, reinforcing the assessment of the prevailing lull in investment activity. In Q2, there was a large gap of 70 basis points between GDP and GVA. The problem is compounded by the fact that agriculture will absorb 12 million between 2011 and 2019, compared to 37 million between 2004 and 2012, and the fact that low labour intensity sectors are growing faster than the overall GDP growth while high labour intensity sectors are seeing weak growth.

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The sequential dip in GVA growth was broad-based, led by all the sub-sectors except mining and quarrying and public administration, defence, the chamber further noted.

"The earlier figures will show that for six years we were growing at double digit", he said, adding that one has to deduct 2 per cent from the GDP number to know the real growth as this government for the last three years adopted a new series and methodology to calculate GDP.

Analysts and industry experts believe that the new series of India's factory output data or Index of Industrial Production (IIP) would mean that the GDP numbers could be significantly higher than the earlier quarters.

"Real GDP at constant (2011-12) prices for the year 2016-17 is estimated at Rs 121.90 lakh crore showing a growth rate of 7.1 percent over the year 2015-16 of Rs 113.81 lakh crore", the Central Statistics Office said in a statement.

"Many economists around the world have concluded that the biggest contributor for the fall in GDP has been demonetisation", he said, demanding that the Central government release a white paper and apologise for "cheating" people in the name of demonetisation of November 2016.

The Bank of Canada has long looked for an improvement in business investment to signal economic growth is on a more sustainable path.

Nearly all sectors, with the exception of agriculture, showed decline in the aftermath of demonetisation.

India's new Goods and Services Tax bill - which imposes a uniform rate of taxation across the country - rolls out from July 1 and should enable the country to achieve its target of 8 per cent growth in the next few years.

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