India’s GDP growth to fall from 8.2% in Q2; here’s what economists say

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Published: November 26, 2018 4:29:28 PM

India's Gross Domestic Product (GDP) growth is expected to be 7.5%-7.6% in the July-October quarter of the financial year 2018-19 as against 8.2% registered in the previous quarter.

India's Gross Domestic Product (GDP) growth is expected to be 7.5%-7.6% in the July-October quarter of the financial year 2018-19 as against 8.2% registered in the previous quarterIndia?s Gross Domestic Product (GDP) growth is expected to be 7.5%-7.6% in the July-October quarter of the financial year 2018-19 as against 8.2% registered in the previous quarter.

India’s Gross Domestic Product (GDP) growth is expected to be 7.5%-7.6% in the July-October quarter of the financial year 2018-19 as against 8.2% registered in the previous quarter, a report by SBI Research has said. Earlier, rating agency ICRA had said that it expects the GDP growth to slow down to 7.2%.

The robust GDP growth number in Q1 was due to a favourable base effect, which may also be seen in Q2. “We estimate that the base impact on Q2 GVA growth is around 30 bps. Based on tax collections, we subsequently expect Q2 GDP growth at 7.5%-7.6%,” the report said.

“We also believe that the growth numbers in Q2 will be helped by a weak base in Q2FY18,” the report added.

GDP Q2 Estimates

  GDP growth (%)
  GVA growth (%)
  Q18.28
  Q2 (SBI)7.5-7.67.3-7.4
  Q2 (ICRA)7.27.1

“…a basket of 21 leading indicators for Q2FY19 is showing a marginal declining trend. Consequently, the headline Q2 GVA growth could be 7.3%-7.4%, due to the slowing of rural demand,” SBI Research said in its report EcoWrap.

Also Read: A massive fall in India’s GDP growth likely in July-Sep quarter; here’s why

However, it added, commercial vehicle sales, domestic air passenger traffic and cement production have maintained double-digit growth during the quarter, which will push up the GVA number for the second quarter of FY19.

Estimating a 7.1% GVA growth in Q2, ICRA’s Principal Economist Aditi Nayar said that the effect of the uneven and sub-par monsoon and instances of crop damage will be reflected in GVA as agricultural growth is likely to be muted. The rating agency estimated that agricultural growth will to slow down to 3.5% in Q2 from 5.3% in Q1.

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