Woes not yet over for economy, GDP growth may see further fall; Nomura tells why

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Updated: December 13, 2019 12:06:36 PM

Even as the growth recovery is expected to set in soon, Nomura said that the economy may see further downside.

india, india growth, economy slowdown, economy news, gdp, gdp growth, gdo slumpThe GDP growth was recorded at over six year low at 4.5 per cent in Q2FY20. The fall is on account of both global and domestic concerns including decline in consumption demand.

Even as the growth recovery is expected to set in soon, Nomura said that the economy may see further downside. In Q4FY20, the GDP is likely to grow at 4.3 per cent amid concerns related to crisis in the overstressed NBFC sector, the global brokerage said in a report. The first quarter of 2020 will see a muted uptick in GDP growth at 4.7 per cent, it added. “Domestic credit conditions remain tight as market concerns in the shadow banking (NBFC banking) have persisted too long,” Sonal Varma, Chief Economist, India and Asia, said on Thursday.

India may record a GDP growth of 4.9 per cent in 2019, down from 5.3 per cent estimated earlier, Nomura said. Similarly, as against the earlier estimate of 6.3 per cent, GDP may grow at 5.5 per cent in 2020.  In 2021, it sees India’s economic growth at 6.5 per cent. “On financial year basis, we expect GDP growth of 4.7 per cent in FY20, and 5.7 per cent in FY21, suggesting a delayed recovery and below-potential l growth through end 2020,” Sonal Varma, Chief Economist, India and Asia, Nomura said.

Also read: PM Modi needs to kick-start lending as health check of shadow banks shows nascent recovery

The GDP growth was recorded at over six year low at 4.5 per cent in Q2FY20. The fall is on account of both global and domestic concerns including decline in consumption demand. The government has announced a slew of measures in the past few months to spur growth. Despite broad-based decline in the manufacturing sector, the pace of contraction of industrial output slowed in October, falling by 3.8 per cent. The inflation also picked up to three year high, the government data showed.

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