Home / News / India /  India's GDP likely to print at 5.8% in Q2: SBI Research

India's GDP growth for the second quarter would be at 5.8 per cent, down 30 basis points from average estimates dragged down by weak manufacturing sector with the steep margin compression, according to SBI Research

The government will release the official numbers on November 30.

Corporate results, operating profit of companies, excluding banking and financial sector, degrew by 14 per cent in Q2FY23 as against 35 per cent growth in Q2FY22, though the top line continued to grow at a healthier pace, stated SBI Research reported headed by Soumya Kanti Ghosh.

Net sales grew by 28 per cent, while bottom line was down by around 23 per cent from the year ago period.

Further, corporate margin seems to be under pressure, as reflected in results of around 3,000 listed entities, excluding banking and financial sector, due to higher input costs with declining operating margins, from 17.7 per cent in Q1FY22 to 10.9 per cent in Q2FY23. SBI report said.

“Given this and the wide divergence in market consensus (6.1 per cent) regarding Q2 GDP numbers, SBI sees the economy printing in at 5.8 per cent, Ghosh said citing the lag of two months in the quarterly GDP data. It also pegs the full year growth at 6.8 per cent, 20 basis points lower than the RBI estimate," said SBI report.

The SBI forecast, based on its composite leading index which is a basket of 41 leading indicators based on monthly data, shows declining economic activity between June and September but increased economic activity in October making Q3 growth more optimistic.

However, Ghosh said, several indicators suggest that the economy has been making resilient progress since Q2 in spite of the drag from global spillovers, elevated inflation and some slackening of external demand as geopolitical developments take their toll on world trade.

S&P Global Ratings has cut India's economic growth forecast for current fiscal year to 7%, but said the domestic demand-led economy will be less impacted by the glodown.

S&P had in September projected the Indian economy to grow 7.3% in 2022-23 and 6.5% in next fiscal year (2023-24).

(With inputs from PTI)

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