GDP growth to plunge to 4.2 per cent in Q2: SBI Research
HYDERABAD: After recording a six-year low GDP growth of 5% in the first quarter, India’s economy may slip further in the July-September 2019 period to 4.2%, warn economists at SBI Research. For the full year of FY20 as well, growth could fall to 5% against 6.1% projected earlier. “We, however, believe this growth rate in FY20 should be looked through the prism of synchronised global slowdown,” it added.
The SBI Ecowrap report released on Tuesday cited weaker auto sales, muted consumer demand, deceleration in air traffic movements, flattening of core sector growth and declining investment in construction and infrastructure as reasons for the bleak prognosis. It said the acceleration rate for 33 leading indicators was down to 17% in September 2019 from as high as 85% in October 2018. The decline started gaining traction from March 2019, it added.
SBI’s house economists expect growth to pick up in FY21 to 6.2%. This, however, needs to be seen in the context of customary revisions to GDP data that are likely in February 2020. In FY17, the Q1 GDP figure of 7.1% was revised upwards in every revision, before it was finally fixed at 9.2%.
Going forward, it said RBI may go for “larger rate cuts” in December monetary policy review to fuel economic growth.