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The recently released gross domestic product quarterly report shows a sluggish but improved economy. Markets responded with a day that saw little change in value.

The advance estimate of real GDP expanded at a seasonally-adjusted annualized rate of 2.5%, according to the U.S. Department of Commerce, falling short of analysts’ expectations of 3%, but much improved over the previous quarter’s 0.4% growth. GDP measures the nation's total output of goods and services. The Commerce Department will release an adjusted first quarter report on May 30.

BBVA Compass, a financial services firm, estimated a first quarter GDP growth of 2.3 or 2.4%. "We are more pessimistic than the majority of analysts," Kim Fraser, an economist at BBVA Compass, said. "Personal consumption and employment were strong in January and February, but slowed dramatically in March. Employment was down drastically," she said.

The increase in the first quarter was due to rises in personal consumption, business inventory, equipment and software, and housing investment, according to the Commerce Department’s report.

"Consumption was stronger than expected, and housing was a strong mover," Fraser said.

Imports increased, which resulted in a lower GDP, but economists like Fraser see an upside to this. "Imports may be an encouraging sign," she said, referencing the fact that they indicate an increase in consumer spending.

Another factor responsible for lower than expected GDP growth was a decrease in spending by local, state and federal governments.

Most of the effects of sequestration, the drastic across the board cuts to federal spending, have yet to be felt in the economy, but defense spending declined 11.5%, which kept the first quarter GDP growth from reaching 3%, according to BMO Capital Markets Senior Economist Sal Guatieri. "Federal defense spending carved 0.6 percentage points from growth," he wrote in a report.

Both Fraser and Guatieri believe the sequestration cuts will have more of an effect in the second quarter. Despite this, Guatieri predicted, "While sequestration will slow GDP in Q2, we still expect growth to top 3% in the second half of the year amid improved household finances, pent-up demand for autos, and the long-running housing market recovery." 

The outlook for economic growth and inflation in Latin America's second-largest economy this year has deteriorated among private-sector economists, according to a Bank of Mexico survey.

Analysts see the country's economy expanding 3.35% in 2013, according to the average estimate of the central bank's April survey, down from the 3.46% expected in the previous month's poll.

Mexico's annual inflation is seen rising 3.9% this year, up from the previous estimate of 3.75%. Thirty-three local and foreign banks and consultancy firms responded to the April survey.

The central bank's survey showed economists maintain a glum view of Mexico's growth as sluggish global demand, particularly in the U.S., is already affecting Mexico's export engine.

The government itself sees first-quarter GDP growth slowing to an annual rate of 1%, the lowest since the recession of 2009, with an economic recovery expected to happen in the second half of the year.

Price worries have recently increased in Mexico after 12-month inflation rose to 4.72% in the first half of April, the highest level in seven months. The central bank has said it is a temporary uptick caused by volatile agricultural prices.

Lower growth and higher inflation led Mexico's central bank to stand pat on rates in its last policy meeting in late April, keeping a neutral tone. The bank already cut the key overnight interest rate by 50 basis points to 4% in its March decision. 

Projecting a modest pick-up in economic activity in the coming months, Reserve Bank today pegged GDP (Gross Domestic Product) growth rate for the current fiscal year at 5.7%, significantly lower than the Finance Ministry's forecast of 6.1 to 6.7%.

"The Reserve Bank's baseline projection of GDP growth for 2013-14 is 5.7%. The bank's current assessment is that activity will remain subdued during the first half of this year with a modest pick-up in the second half, subject to appropriate conditions ensuing," RBI said in its annual monetary policy review for 2013-14.

India's economy grew by 5% in the last fiscal year, lowest in a decade, because of poor performance of manufacturing, agriculture and services sector.

The RBI's current fiscal year's growth estimate of 5.7% is much lower than the finance ministry's growth projection of 6.1-6.7% and Prime Minister's Economic Advisory Council's growth projection of 6.4% for 2013-14.

It is also lower than the World Bank's growth projection, which predicted the Indian economy to grow by 6.1% in 2013-14 on account of robust domestic demand, strong savings and investment rate.

Not happy with RBI's growth projection, Planning Commission Deputy Chairman Montek Singh Ahluwalia had described its outlook as 'pessimistic'.

"Reserve Bank is clearly more pessimistic than the government is. I think that the government forecast as of now is feasible. Critically what matters is, how effective we are in restoring the momentum of investment in the large projects", the Plan panel deputy chief said. The Reserve Bank today cut the key interest rate by just 0.25% to 7.25% …….. (Remaining text not included in this sample.)

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