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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.

Updated Date: Nov 26, 2018 17:16 PM

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