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Domestic ratings agency ICRA has forecasted a 2 percent Gross domestic product (GDP) growth in the fourth quarter of 2020-21 and a 7.3 percent contraction for the full fiscal year. From a GVA or gross value-added perspective, it pegs Q4 growth at 3 percent and the full year contraction at 6.3 percent. According the agency, the 2 percent projected GDP growth will help the economy avoid a double-dip recession as indicated by the National Statistical Office (NSO) for Q4. ICRA’s projection is better than the 8 percent contraction forecast by the NSO as it sees Q4 growth at only 1.1 percent.

As per to the report, the full-year GDP is not the average of the four quarters as the weight of GDP in each quarter is different because the output in each quarter varies. Typically, the fourth quarter each year has the highest weight in annual GDP, which is the value of all the goods and services produced in a given 12-month period in an economy. Adding up the four quarters growth/contraction in FY21, the full-year GDP contraction stands at 8.45 per cent. In Q1, the economy had shrunk by 23.9 per cent, which had improved to (-) 7.5 per cent in Q2, while it returned to the growth territory in Q3 with a marginal 0.40 per cent expansion.

The report expects the year-on-year GVA growth at 3 per cent in Q4 of FY21 up from 1 per cent in Q3, and GDP growth in the same quarter at 2 per cent, up from 0.4 per cent in Q3, suggesting  the economy is on course to avoid double-dip recession as implied by the NSO.