New Delhi: India’s economic growth slowed further in the December quarter as a series of interest rate hikes by the country’s central bank hurt demand and weakness in the manufacturing sector continued. Asia’s third largest economy recorded year-on-year growth of 4.4% in October-December, down from 6.3% in July-September, data released by the government on Tuesday showed. October-December growth was below a Reuters forecast of 4.6%. India’s manufacturing sector shrank by 1.1% year-on-year in the quarter, a second straight contraction reflecting weakness in consumer demand and exports.

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External demand was weak as central banks globally continued monetary tightening to tame inflation. The Reserve Bank of India (RBI), has raised its benchmark repo rate by 250 basis points since May last year and economists expect a further rate hike of 25 basis points to 6.75% in April before it pauses until year end. The sharp fall in the year-on-year growth rate is also partly due to a fading of pandemic-induced base effects which had contributed towards higher growth figures in fiscal 2021/22.

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