Q4 GDP growth estimate: No consensus among economists, forecasters; govt to release data tomorrow

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Updated: May 28, 2020 5:41 PM

While ICRA estimates the Q4 GDP growth at 1.9 per cent, CRISIL estimates it at 0.5 per cent.

gdp, gross domestoc poduct, indian economy, Q4 GDP growth

Eyes are glued on the Q4 economic growth data, as it includes the figures for one week of lockdown, which has the potential to drag the overall growth figure down.The government is set to release GDP growth figures for the fiscal fourth quarter Jan-Mar tomorrow; however, economists’ and rating agencies’ forecasts show no consensus and vary over a very wide range. Eyes are glued on the Q4 economic growth data, as it includes the figures for one week of lockdown, which has the potential to drag the overall growth figure down. While ICRA estimates the Q4 GDP growth at 1.9 per cent, CRISIL estimates it at 0.5 per cent. SBI research has pegged the Q4 FY2019-20 GDP growth rate at 1.2 per cent. In today’s report, Care Ratings has put the most optimistic Q4 GDP growth at 3.6 per cent. A Reuters poll of economists has forecast India’s fourth quarter GDP growth at 2.1 per cent.

One of the major reasons for diverse predictions could be the absence of reliable headline numbers, making the predictions less precise. The difference in the predictions is so large that six out the 52 economists in the Reuters poll have also predicted a contraction in GDP in Q4. However, the GDP growth in full-year FY20 is unanimously believed to be in the range of 4 – 4.3 per cent. The impact of the Covid-19 outbreak on travel, tourism and hospitality, government expenditure compression amidst revenue shortfalls in March 2020, and subdued credit growth are expected to have adversely impacted service sector performance in Q4 FY2020, said Aditi Nayar, Principal Economist, ICRA.

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Generally, business and economic activity shoots up in the last quarter as companies put more effort to meet their annual targets. However, the nationwide lockdown called by Prime Minister Narendra Modi in the last week of March had put a major roadblock before the economy. The coronavirus pandemic is not the only trouble behind the country’s growth, instead, it is superimposed on the previous trouble of a longer-than-anticipated slowdown in the country. These two reasons clubbed together are responsible for the pessimistic growth predictions in the last quarter.

Meanwhile, the growth figures for the fourth quarter will also help in giving some clarity in establishing a base for the predictions of the first quarter when economic activity had almost come to a standstill in April and showed very limited momentum in May. Recently, RBI Governor Shaktikanta Das said that the Indian economy will contract in the current fiscal.

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