US GDP Growth Unrevised At 1.9% In Q4

Consumer spending saw sharp upward revision to nearly 3% growth in the Q4 whereas business investment was revised lower.

The U.S. economy grew at an anemic 1.9 percent rate in the fourth quarter, unchanged from an initial estimate, although consumers performed better than first thought.

The full year 2016 growth was 1.6%. In the quarter ended December 31, 2015 the GDP growth was 7.2 per cent.

The CSO also said that the sectors which are likely to register 7% growth in 2016-17 are public administration, defence, manufacturing, trade, hotels, transport, communication and broadcasting-related services.

The Economic Survey had pegged the FY2017 growth rate in the range of 6.5 to 6.75 percent.

While analysts pointed out the lack of congruity between the CSO's estimate and other high-frequency data and corporate results, chief statistician TCA Anant said all available data have been made use of in the second advance estimate, including corporate performance up to the December quarter, sales of commercial vehicles, railway freight, etc, for the first "9/10 months of the financial year".

Although this is slower than the 7.9% growth registered in 2015-16, it gives the Narendra Modi government the firepower to defend its decision to scrap old Rs 500 and Rs 1,000 notes, which, according to critics, has been disastrous for the economy. "Overall, the GDP numbers seem to suggest we may have just leapfrogged the impact of demonetisation", he added. Despite demonetisation, merchandise exports rose 2.3% in November, 5.7% in December and 4.3% in January. "There were reports that manufacturing activities in many sectors were affected due to demonetisation but as we see from the numbers manufacturing growth at very 8.3 per cent is very satisfying number and promising number", said Shaktikanta Das. With the second estimate for the fourth quarter, the general picture of economic growth remains the same; the increase in personal consumption expenditures was larger while increases in state and local government spending and in nonresidential fixed investment were smaller than previously estimated.

Estimates for growth this year range between 2 percent and 3 percent. That matched 2011 as the slowest United States full-year growth since the end of the recession.

The Reserve Bank of India had projected growth rate of 6.9 per cent for FY2017 at its sixth bi-monthly monetary policy meeting early this month.

Economists have cautioned it will be hard to significantly boost the economy's sustainable growth rate amid weak productivity gains and demographic forces holding back labor-force expansion.

  • Zachary Reyes