India GDP: What the economists are predicting
Investors and policymakers will be closely watching Indiaâ€™s fourth-quarter and full fiscal year 2012/13 gross domestic product (GDP) growth figures on Friday.
The economy grew 4.5 percent in the December quarter, but a Reuters poll has shown that Asiaâ€™s third-largest economy will likely perform a little better and expand by 4.8 percent in the quarter that ended in March.
For the financial year 2013, the government had estimated the economy will grow 5 percent, the lowest in a decade. However, if the poll consensus proves right, full-year growth will be worse than the governmentâ€™s estimate.
This economic data will set the tone for further interest rate action by the Reserve Bank of India, especially in the current scenario where hopes of a rate cut have risen after inflation fell below 5 percent in April.
Here are some growth estimates and outlook from investment banks:
J.P.MORGAN: The investment bank expects January-March growth at 4.9 percent as compared to 4.5 percent in the previous quarter, largely on the back of a recovery in services. This will bring growth for the full fiscal year to 5 percent, down from 6.2 percent in the previous financial year, the bank said. â€śFrom the expenditure side, improved net exports and a modest upturn in investment should be the growth drivers. Much of this is anticipated by the market and the government and thus is unlikely to cause any flutter,â€ť economists at JP Morgan wrote in a note to clients.
CREDIT SUISSE: Indiaâ€™s growth for the Jan-March quarter is expected to remain soft at 4.8 percent, due largely to a reduction in government spending, the investment bank said in a note. â€śWe are hopeful that the lower interest rate environment and improving investment should result in better growth numbers from the June quarter,â€ť the report added.
STANDARD CHARTERED: StanChart expects fourth-quarter GDP grew 5 percent, primarily because of a lower statistical base from a year ago. The investment bank also expects some upward revision in recent quarterly GDP releases, pushing the full-year GDP for the financial year ending March 2013 to 5.2 percent. â€śActivity indicators have stayed weak and an uptick in the Q4 FY13 GDP data could provide comfort by indicating that growth has found a floor,â€ť it said.
NOMURA: GDP growth expected to remain subdued at 4.5 percent for the March-quarter due to the pullback in government spending, weaker consumer demand and subdued investment, economists said.
BARCLAYS: Economists at Barclays estimate that GDP growth will remain weak in the fourth quarter and will come in at around 4.9 percent, which points to full-year GDP growth of 5 percent. â€śWe think economic momentum will remain weak in the near future,â€ť Barclays said in the note. â€śThe likelihood of continued fiscal austerity, along with weakness in typically resilient segments of the economy, such as the domestic services sector, suggests sluggish economic activity for a whileâ€ť.
CREDIT AGRICOLE: The brokerage expects GDP growth for financial year which ended in March at 5 percent, on the back of an improved trade position and stronger government spending. This outcome could help relieve investorsâ€™ concerns over the growth outlook, especially regarding the still-slow investment cycle, it said in a note.