Industrial output growth slowed to 1.8% in December due to sustained sluggishness in the manufacturing sector and decline in mining and capital goods sectors. Data released by the Central Statistics Office showed the index of industrial production rose 1.8% in December, lower than the 5.9% growth posted in November and 8.1% registered in the same year-ago month. During April and December, industrial output clocked 3.6% growth compared to 8.3% in the corresponding period last year. The industrial sector has been under stress for a significant period due to stubborn inflation, rising input costs, high interest rates and delay in implementation of projects and policy rollout. Government data released earlier this month showed the economy is estimated to grow 6.9% in the current fiscal year which ends in March and the manufacturing sector is expected to expand 3.9% in 2011-12 compared to a growth of 7.6% in 2010-11. Some economists said if the trend persists it would be difficult to post 6.9% growth in 2011-12 as the industrial sector has to grow a minimum 6% in the last quarter. Friday’s data showed the mining sector declined 3.7% in December compared to 5.9% expansion posted in December 2010 while the manufacturing sector rose 1.8% compared to 8.7% growth in the same year ago month. The electricity sector grew 9.1% in December compared to 5.9% growth registered in December 2010. The capital goods sector posted the fourth consecutive month of decline. It fell 16.5% in December 2011 compared to agrowth of 20.2% in December 2010. The sector has displayed volatility for the past of couple of months and economist said the decline showed that there is an investment slowdown. Some economists said industrial production has bottomed out and is likely to make a slow recovery. But the recovery would depend on how government policies pan out in the months ahead and the global economic situation.
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