India growth slows

One of the major growth economies, India, has recorded a slump in factory output. It had been hoped that the economic success of China and India would be two of the drivers which would help other countries weather some of the worst effects of the recession.

As recently as February factory output was growing at a robust 9 per cent. But it’s now fallen by 0.4 per cent – the first decline in 13 years. Economists had been expecting a drop – but not a reversal – with several talking of a possible 2 per cent rise in output.

India has recently suffered a series of body blows which are especially marked because of the astonishing growth it was achieving until so recently. There had been an economic slowdown – but the reversal of fortunes has suddenly accelerated.

Indian exports have dropped by 12 per cent. The reserve Bank of India has cut interest rates three times in less than eight weeks. Oil consumption, cement production, steel output and a decline in transport manufacture – tell-tale indicators – have all fallen. Lorry sales – tied to industrial output – have halved and car production has fallen by a fifth.