Deloitte Expects India’s GDP to Weaken

By Kalen Smith, Big4 Blogger

A new report from Deloitte predicts that India’s GDP growth will slow in the coming months. Analysts predict that economic growth will drop below 6.5% for the remainder of the year.

Economic activity is expected to slow as monsoons take hold of the country. Increasing inflation rates also pressures consumers to reduce consumption.

Deloitte has reduced its GDP predictions for India several times in the past two quarters. The outlook has become increasingly negative as the monsoon has been below average. The monsoon plays a key role in India’s agricultural industry, which is responsible for over 15% of India’s GDP.

Other firms share Deloitte’s pessimistic outlook on the Indian economy. A few firms have actually predicted GDP growth to slow below 6% in the coming quarters. Morgan Stanley’s estimate for GDP is a full percentage point lower than Deloitte’s for 2012.

GDP growth has already slowed due to factors affecting the global economy. The European debt crisis threatens the stability of the Indian economy just as much as that of any other country. However, India and other South Asian countries have been able to isolate themselves from many of the economic challenges facing the western world.