BackQ4FY22 GDP growth to decelerate for third consecutive quarter
Economists have a wide range of growth forecasts from 2.8% to 5.5% for the January-March quarter of FY22. The government is scheduled to release Q4 FY22 GDP numbers tomorrow
PremiumIndia's economic activity is expected to have lost some pace in the fourth quarter of FY22 due to Omicron-related restrictions, higher inflation, and the ongoing Russia-Ukraine crisis.
Economists have a wide range of growth forecasts from 2.8% to 5.5% for the January-March quarter of FY22. The government is scheduled to release Q4 FY22 GDP numbers tomorrow.
Economists have also noted part of the weakness in the upcoming release would be due to a higher base one year ago. The government does not officially release quarter-on-quarter GDP data.
While the State Bank of India's research report Ecowrap expects growth at 2.7% for the fourth quarter of FY22, rating agency Icra sees 3.5% growth.
Take a look at what analysts expect regarding the GDP forecast:
SBI forecast For Q4FY22
The SBI's Economic Research Department forecasts India's GDP to grow 2.7% in Q4 FY22, saying that uncertainties plague Q4FY22 GDP numbers.
We are projecting GDP growth for FY22 at 8.5% and Q4 FY22 at 2.7%. We however believe the GDP projection for Q4 FY22 is clouded by significant uncertainties. For example, even a 1% downward revision in Q1 GDP estimates of FY22 from 20.3%, all other things remaining unchanged could push Q4 GDP growth to 3.8%, the report noted.
The report noted that the Central Statistics Office had projected Q4 GDP at ₹ 41.04 lakh crore and FY22 real GDP growth at ₹ 147.7 lakh crore, an improvement of 1.7% over pre-pandemic levels.
We believe that downward adjustments in Q1, Q2 and Q3 numbers could have a soothing impact on Q4 GDP numbers. Every ₹ 10,000 crore revision adds/subtracts 7 basis points from GDP growth, the report said.
What Icra expects for Q4FY22
India's GDP growth may have slowed down to 3.5% in the fourth quarter of 2021-22, from 5.4% in the October to December 2021 quarter, rating agency ICRA has projected.
The economy’s Gross Value Added (GVA) is expected to rise even slower at 2.7% between January and March 2022 compared to 4.7% in the previous quarter.
The rating firm attributed the downturn in growth momentum to the impact of higher commodity prices on margins, decline in wheat yields and the hiccups in the recovery of contract-intensive services owing to the third wave of the pandemic as well as the high base from last year.
Reuters poll
Growth in Asia's third-largest economy was pencilled in at 4.0% for the January-March quarter from the same period a year ago in a May 23-26 Reuters poll of 46 economists, down from 5.4% in Q4 2021.
If realised, that would be the slowest in a year, and a third consecutive quarter of weaker growth.
January-March was the final quarter of 2021/22 fiscal year. The economy grew at 20.3%, 8.5% and 5.4% in the first three quarters of the financial year, respectively, which could be revised.
Most economists have warned saying that sticky inflation and high interest rates could dent consumer spending, which would eventually dampen India's primarily consumption driven economy.
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