Home / News / India /  SBI trims GDP growth forecast to 6.8% for FY23

State Bank of India (SBI) chief economist has revised down India's full-year GDP growth forecast to 6.8 for the financial year FY23. Earlier, the growth forecast was 7.5%. The economist cited statistical adjustments as the reason for lowering the GDP forecast, however, expects growth momentum to increase the pace in the second half of the fiscal.

SBI group chief economic adviser Soumya Kanti Ghosh said, "We are now revising our annual GDP growth for FY23 to 6.8%, mostly due to statistical adjustments, but said growth momentum likely to show an increasing momentum in the second half," as reported by PTI.

SBI's lowering of GDP growth forecast comes after the National Statistical Office (NSO) on Wednesday released the data for the April-June quarter (Q1) of 2022-23, where the economy showed a growth of 13.5% -- lower from 20.1% in Q1 of FY22.

In Q1FY23, India's real GDP is estimated at 36.85 lakh crore, as against 32.46 lakh crore in Q1 2021-22, showing a growth rate of 13.5%. Meanwhile, the gross value added (GVA) growth data came in at 12.7% in Q1FY23 also lower than 18.1% in Q1FY22. The worst hit segments are manufacturing, utility services, and construction.

In a note on Thursday, the SBI chief economist highlighted that at 13.5% real GDP growth has contracted by 9.6% sequentially, but the seasonally adjusted real GDP growth series shows a pick-up in economic momentum, with higher growth at 5.6% sequentially in Q1 compared to -4.1% in Q1FY22 and 1.9% in Q4FY22.

He stated that the headline GDP numbers hide more things than these reveal and it's time to seriously introspect on the measurement of IIP and CPI baskets which were last revised in 2012.

Though the GDP grew in double-digits, Ghosh stated that but still it came way below the market expectations and the primary culprit is growth in the manufacturing sector which record a measly 4.8% growth in Q1.

During the first quarter of FY23, the manufacturing sector recorded a growth of 4.8% sharply down from 49% in Q1FY22. The growth rate in construction stood at 16.8% -- a steep drop from 71.3% in Q1FY22. Also, mining and quarrying growth declined to 6.5% from 18% in Q1 of FY22.

For Q1FY23, the economist had forecasted GDP growth at 15.7%. Also, GVA growth fared lower than forecast.

In the remaining quarters, Ghosh expects GDP growth to be at 6.9% in Q2FY23, further dropping to 4.1% in Q3 followed by a 4% rate in Q4. Overall, Ghosh expects India's full-year economic growth at 6.8% for FY23.

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