Q2 GDP growth likely to slow to 7.5-7.6%, says SBI research report; data to be out on Friday

New Delhi: The GDP growth in the September quarter is expected to decelerate to 7.5-7.6 percent over the previous three-month period mainly due to a slowdown in rural demand, an SBI research report said on Monday.

The GDP growth at constant prices (2011-12) was 8.2 percent in the April-June quarter of 2018-19.

The Central Statistics Office (CSO) will be releasing the estimates for GDP growth for July-September on Friday.

Representational image. Reuters.

Representational image. Reuters.

The 'SBI Ecowrap' report said the SBI Composite Leading Indicator (CLI), a basket of 21 leading indicators for September quarter of the current fiscal, is showing a marginal declining trend.

Consequently, the headline second quarter Gross Value Added (GVA) growth could be 7.3-7.4 percent, due to the slowing of rural demand, it said.

"We also believe that the growth numbers in the second quarter will be helped by a weak base in September quarter 2017-18.

"We estimate that the base impact on second-quarter GVA growth is around 30 bps. Based on tax collections, we subsequently expect second-quarter GDP growth at 7.5-7.6 percent," said Ecowrap.

It further said commercial vehicle sales, domestic air passenger traffic and cement production have maintained double-digit growth during the July-September quarter. All these indicators pushed up GVA in the quarter.

The monthly data of various indicators for October 2018, however, suggest the GVA growth is slowing down due to a decline in demand, the report said.

"Of particular concern, is that non-food credit, bank deposits and sale of passenger and commercial vehicles have slowed down as compared to previous month," it said.

Also with a slowdown in government spending in the second quarter, the fiscal impulses to growth would now be clearly missing, the report added.

Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to Firstpost.com/Whatsapp and hit the Subscribe button.

Updated Date: Nov 26, 2018 17:16:30 IST

Also See