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Economist at UOB Group Barnabas Gan re-assessed the forecasts of economic growth in India for the current year.

Key Quotes

“India’s GDP decelerated further to 4.7% y/y in the three months between October and December 2019, in line with market expectations. Gross Value Added (GVA) growth also fell to 4.5% y/y, the slowest since 4Q12 (January – March 2013). Accounting for the latest data, India grew 5.1% in the first nine months of its fiscal year, compared to 6.3% in the same period a year ago.”

“Growth had been led by private consumption (+5.9% y/y) and government expenditure (+11.8% y/y), while gross fixed capital formation (GFCF) contracted 5.2% y/y. Trade continued to see further headwinds as exports contracted for its second consecutive quarter (-5.5% y/y).”

We downgrade our GDP outlook to 4.8% in the current fiscal year, compared to our initial outlook of “6.0% with downside risk”. Inflation pressures remain in line with RBI’s medium-term target for CPI “within a band of +/- 2%” at December’s reading of 3.4%. As such, we continue to expect RBI to keep its repurchase rate and reverse repurchase rate at 5.15% and 4.90% respectively unchanged for the year ahead.”