India’s surprisingly strong quarterly expansion has economists raising short-term growth forecasts but worrying that inflation and interest rates could rise and crimp growth in the longer term.
In the three months ended Sept. 30, gross domestic product rose 9.2% from a year earlier, the government’s Central Statistical Organization said. The robust growth, powered by strong spending by Indian consumers and corporations, topped the 8.4% expansion in the same quarter of 2005 and was above analysts’ expectations of GDP growth of 8.9%.
The unexpectedly strong performance gives some economists jitters. While few say India’s economy is overheating, they caution that the faster expansion means politicians and financial regulators must keep a closer watch on the potentially negative side effects of increasing affluence.