US shrinks and India leads in GDP growth for 2014-15

 The Dollar Business Bureau The Real Gross Domestic Product (GDP) of the United States decreased at an annual rate of 0.7% during January-March 2015, said an official release by the United States Department of Commerce (USDC), on Friday. While a similar value of Real GDP was last seen in Q1-1970, the last quarter with larger value of 2.2% was witnessed in  Q4-2014, and the last quarter with smaller value was -2.2% in Q1-2014, according to the second estimate comparisons of  Q1-2015 by the Bureau of Economic Analysis, USDC. This decline in the real GDP during the Q1 of 2015 reflected decline in exports of goods (mainly of capital goods, autos and parts), business investment (notably in mining exploration,  shafts and wells) and the State & local government spending.

GDP growth rate comparison

  Of the total Government consumption expenditures and gross investment that stood at -1.1% in Q1-15 as against -1.9% in Q4-14, the State and local government spending decreased to 1.8% in Q1-15 as against positive 1.6% in Q4-14. While the exports of goods and services together witnessed a 7.6% decline (goods exports at -14% in Q1-15 against 2.4% in Q4-14, services exports at 7.4% in Q1-15 against 9.2% in Q4-14), the imports recorded 5.6% in Q1-15 against 10.4% in Q4-14, with both the goods and services imports recording 5.1% and 7.6% against 1.4% and 10.0% during Q1-14, respectively. Whereas the overall percentage change in case of Gross private domestic investment stood at 0.7% in Q1-15 against 3.7% in Q4-14. Even though there is a decrease compared to Q4-14, the investments in Housing, Intellectual property products, equipments in Q1-15 stood positive. However, negative changes were seen in Gross private domestic investments in case of fixed investments, non-residential investments. Whereas, the preliminary estimates for Q1-15 in terms of Corporate profits say that the Taxes on corporate income increased $9.3 billion in Q1-15 against a decrease of $4.8 billion in the Q4-14. And, the profits of domestic financial corporations decreased $2.6 billion in the first quarter further from a decrease of $12.5 billion in Q4-14 and the profits of domestic non-financial corporations decreased $100.4 billion in contrast to an increase of $18.1 billion in Q4-14. Meanwhile, in contrast to the US economy, India’s GDP by the end of last quarter of 2014-15 stood at 7.5% which is also ahead of China’s 7% GDP and for entire FY’15, India’s GDP now provisionally stands at 7.3%. According to the Central Statistics Office (CSO) of the Ministry of Statistics and Programme Implementation’s quarterly estimates, India’s GDP growth in 2014-15 witnessed a year-on-year increase from 6.9 per cent in 2013-14. As per the CSO, the country’s Real GDP at constant (2011-12) prices in 2014-15 is now estimated at 106.44 lakh crore (as against 106.57 lakh crore estimated earlier on February 9, 2015). The sectors which registered a growth rate of over 7.0 % include trade, hotels, transport, communication and services related to broadcasting, financial, real estate and professional services, public administration, defence and manufacturing, among others. And, the growth in ‘agriculture, forestry and fishing’, ‘mining & quarrying’ and construction is estimated to be 0.2 %, 2.4 % and 4.8 % respectively. The third advance estimates for crop production released by the Ministry of Agriculture for 2014-15 showed a downward revision registering a decline of 5.4% year-on-year. While the Index of Industrial Production (IIP) registered a 1.4% growth against an estimated growth rate of 1.3% for 2014-15, the IIP of manufacturing registered a growth rate of 2.3% against an estimated growth rate of 1.6%.    

May 30, 2015 | 8:59 pm IST.