Indian Economy Posts Best Performance Since 2007

Expansion between April and June was led by a 12.4% year-on-year surge in manufacturing

India's economy grew 8.8% in the fiscal first quarter, its best performance since 2007, data showed on August 31 as the country returned to boom levels last seen before the financial crisis.

The expansion between April and June was led by a 12.4% year-on-year surge in manufacturing, a 9.7% leap in services and an 8.9% jump in construction, official figures showed.

"India is flying," said HSBC economist Frederic Neumann, noting the economy showed no signs of a double-dip slowdown.

The last time Asia's third-largest economy grew at a faster pace was in the final three months of 2007, when it expanded 9.7%.

The figures for the first quarter marked an acceleration compared to the previous quarter, when growth was clocked at 8.6%.

The South Asian country, home to 1.2 billion people, is the world's second-fastest growing major economy, slightly behind regional rival China, which logged growth of 10.3% in the same three-month period. Both countries have been unwinding huge stimulus spending put in place in the wake of the global financial crisis.

But economists warned India had probably posted its strongest growth figures for the fiscal year to March 2011 after recent data pointed to a deceleration in industrial output with exports to key developed markets sagging.

Still, economists forecast India will post full-year growth to March 2011 of around 8.5% -- enviable compared with anemic levels of advanced economies.

India's still inward-looking economy is mainly driven by domestic demand, with exports accounting for less than 20% of gross domestic product.

Before the financial crisis, India was averaging annual growth of 9%. It escaped the worst of the global crunch, with its banking sector spared any major damage and now rising personal incomes have boosted domestic demand for cars, mobile telephones and other consumer durables.

However, Premier Manmohan Singh says the economy needs double-digit growth to lift hundreds of millions of Indians out of abject poverty.

Copyright Agence France-Presse, 2010

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