Offshore Capitalist

India economy grows 7.9%, shatters forecasts

India reported its best growth figures in 18 months on Monday as government spending and record low interest rates helped Asia’s third-largest economy rebound from the global financial crisis.

The 7.9-percent expansion in the quarter to September from a year earlier far eclipsed market forecasts and prompted the government to raise its growth expectations for the financial year to March 2010.

The growth figures, which underscored Asia’s role in spearheading the global recovery, also stoked speculation about when India would begin exiting stimulus measures brought in to ride out the worldwide slump.

“As upside surprises go, this was a big one,” said HSBC economist Robert Prior-Wandesforde, who called the fiscal second-quarter performance “extraordinary.”

The growth numbers easily outdistanced the consensus forecast of 6.3 percent growth and drove Mumbai’s benchmark 30-share Sensex index 1.77 percent higher to 16,926.22 points.

The data was expected to trigger more flows into India’s share market which has risen by more than 70 percent this year on the back of foreign fund purchases worth nearly 16 billion dollars.

via India economy grows 7.9%, shatters forecasts.

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