GDP EUPHORIA FACES REALITY CHECK, TIME FOR EXTRAORDINARY MEASURES

LAST week’s revision in GDP growth for January-March 2024 at 7.8 percent came as a pleasant surprise, given that the markets had expected it to be 7-7.4 percent.

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It suggested that large sections of the economy remained insulated from the effects of the Gulf war that erupted at the end of February. Growth was largely driven by a robust performance in services, particularly in trade, hospitality and communications, as well as in the finance and IT sectors. A closer look, however, revealed signs of stress in manufacturing, which recorded its slowest quarterly growth of 7.3 percent in the year. Private consumption, which accounts for nearly 57 percent of GDP, also indicated moderation. Growth in inflation-adjusted private consumption eased to 7.1 percent in Q4 from 8.2 percent in the preceding quarter.