Q2 GDP Growth To Be Still Below 5%

Even as the finance ministry has been doing all its bit to promote and boost investment, India for the second half until September 2019 may report a GDP number below 5%. On Monday, IIP data revealed saw industrial output contract to a nearly 8 year low and it is reflective of a deepened slowdown.

Q2 GDP Growth To Be Still Below 5%

On November 29, the data for GDP growth for H2FY20 will be unveiled. In the previous ended quarter of June, the GDP growth came in at a dismal 5%, which is the 6-year low.

"GVA (Gross Value Added) and IIP measure two different data points and industrial GVA growth has generally been in excess of IIP growth. However, in Q2 of FY20, industrial GVA growth is likely to be lower than 2.7% achieved in Q1 of FY20," said Devendra Kumar Pant, chief economist at India Ratings.

Global firm Nomura has revised its GDP forecast for the September quarter to still lower at 4.2%. The agency has also decelerated its whole year GDP growth to 4.9% from the earlier 5.7%. This is the lowest forecast given among all of the forecasting agencies.

SBI also holds the same view that the country in the Q2FY20 will still report slower growth as out of 26 indicators only some 5 indicators have been showing acceleration in the month of September. If we map the leading indicators showing acceleration, there is a distinct possibility that growth in GDP in Q2 will be lower than 5%," the report said.

We will see from Q3 onwards a slight recovery and may end Q4 probably with a growth rate of close to 7%. The factors that will support this recovery are a favourable base, some favourable lagged effect of RBI's policy rate cuts meant to infuse liquidity and government spending. This recovery will be clearly visible from Q4. Please bear in mind, a large part of it will be statistical", an economist at Mahindra Group is quoted as saying in a leading business dailies report.

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