, India

India GDP growth edged up to a measly 5.5%

But analysts still call for a 50 bps cut in interest rates before this year ends.

According to BBVA Research, India’s GDP growth picked up in 2Q12 to 5.5% y/y as favorable base effects and an increase in construction helped support year-on-year industrial output, even as services continued to slow.

Here's more from BBVA:

While the GDP outturn beat expectations, downside risks to the outlook continue to linger given the global slowdown, slack domestic investment, and concerns over fiscal policy and the pace of economic reforms.

We maintain our call for a 50 bps cut in interest rates during the remainder of 2012, although a cut at the next policy meeting in September seems unlikely given high inflation and the absence of fiscal reforms. Today’s outturn is in line with our full-year projection of 5.6% GDP growth in 2012

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