Economy roundup: India’s GDP growth slumps, Microsoft overtakes Apple, Trump and Xi plan to meet

By Pavas Gupta

Last week saw India’s quarterly growth decline to 7.1% as US President Trump and Chinese President Xi Jinping planned a much anticipated dinner to discuss the trade war. Here are the details:

Indian quarterly growth slows to 7.1%

Data released by the Indian government showed that the GDP slowed down to 7.1% in the July-September 2018 quarter — the slowest in three quarters. Despite this, India continues to maintain its position as the world’s fastest-growing economy, ahead of China.

Secretary in the Department of Economic Affairs, Subhash Chandra Garg, called the growth number “disappointing”.

“Manufacturing growth at 7.4 per cent and agriculture growth at 3.8 per cent are steady. Construction at 7.8 per cent and mining at -2.4 per cent reflect monsoon months deceleration. Half-year growth at 7.6 per cent is quite robust and healthy,” he tweeted.

Factors that contributed to a decelerating GDP growth included a weak rupee, and a squeeze in India’s shadow banking sector that hindered both investment and consumption. Some economists expect growth to slow down to around 7% in the second half of this fiscal year due to cuts in state spending, muted rural demand, and the statistical impact of higher growth in the same period a year ago.

April-October fiscal deficit crosses full-year target

According to the Controller-General of Accounts, India’s fiscal deficit has breached the Budget Estimate within the first seven months of the current fiscal year. Data released on Friday showed a fiscal deficit of over ? 6.48 lakh crore, against a Budget Estimate of ? 6.24 lakh crore, or 103.9% of the target.

The government wants to maintain the deficit at 3.3% of the GDP even though experts believe it could touch 3.5%.

Core industries grow 4.8%

In October, India’s infrastructure grew by 4.8%, with strong performance in cement, electricity, and coal sectors. However, this was lower than the 5% growth seen in October 2017.

On the other hand, there was a decline in the output of crude oil, natural gas, and fertilisers, while petroleum refinery production increased marginally.

Microsoft’s stock market value closes above Apple’s

On Friday, for the first time in eight years, Microsoft Corp.’s stock market value closed above Apple Inc.’s. Microsoft benefitted from growth in cloud computing while Apple was hit by investor concerns around slumping iPhone sales and demand.

Microsoft’s shares rose 0.6% to end the week at $ 110.89, pegging its market capitalisation at $ 851.2 billion. Meanwhile, Apple’s shares fell 0.5% to $ 178.58, bringing the company to a market value of $ 847.4 billion.

Trump, Xi set for “big meeting”

On Saturday, US President Trump and Chinese President Xi Jinping will sit down for a much awaited dinner, while investors and allies remain eager for a trade war truce between the world’s two biggest economies.

“What’s most realistic to expect is that China and the US come to an agreement on the basis of the dialogue and on the basis of the negotiations, because that has [those have] broken down. There hasn’t been a negotiation, not even a starting position,” Henry Fernandez, chief executive officer of MSCI Inc., said in an interview. He warned that if talks fail to bring about a way for the two sides to negotiate, “markets will react negatively”. “Tension between the US and China is creating a dent on a meaningful part of that global trading system.”