IGI Logo

Expect 4QFY22 real GDP growth at 4.5-5.0%

* Our in-house Economic Activity Index for India’s real GVA (EAI-GVA) posted a higher growth of 3.7% YoY in Feb’22 v/s a meager growth of 0.7% YoY in Feb’21 and 2.6% YoY in Jan’22. This was primarily driven by a higher growth in non-farm sector as farm sector continued to contract for the second successive month.

* EAI-GDP, however, witnessed a three-month low growth of 4.7% YoY in Feb’22 due to a sharp negative contribution from external trade. On the contrary, domestic consumption and investments performed well during the month.

* The 4.7% YoY EAI-GDP growth was supported by strong government core revenue growth of 40% YoY in Feb’22 (albeit slower than the 51% YoY growth in Jan’22). Excluding government spending, EAI-GDP grew at a three-month slow pace of 2.7% YoY in Feb’22, v/s 3.2% YoY in Jan’22.

* A monthly analysis of indicators for Mar’22 showed mixed signals. Some indicators such as PMI services, currency in circulation, mobility indicators (Google and Apple) and power generation improved in Mar’22. Conversely, others such as PMI manufacturing, toll collections, Vahaan registrations and exports exhibited either deceleration or continued contraction in Mar’22.

* Overall, our EAI-GVA suggests that the economic activity performed better in Feb’22 vis-à-vis Jan’22, which also indicates the subsided threat of the Omicron virus. However, economic activity for Mar’22 looks uncertain at this point. Accordingly, we continue to expect real GDP growth to be 4.5-5.0% in 4QFY22, similar to the CSO’s forecast of 4.8% YoY.

To Read Complete Report & Disclaimer Click Here

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412

Above views are of the author and not of the website kindly read disclaimer