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27 February 2018
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GDP(The
Total Investment & Insurance Solutions)
India's
economic recovery would pick up pace during third quarter (Q3) of financial
year (FY) 2018 with gross domestic product (GDP) marginally below that previous
quarter, says HDFC Bank in a research note, ahead of the release of India's
economic growth for the third quarter.
In
the report, HDFC Bank says, "We expect economic recovery that started in
Q2 to continue its upward climb in the third quarter to 6.9% (Real GDP)
slightly lower than 7.0% registered in the corresponding period of last year
but significantly higher than 6.3% clocked in Q2 of the current fiscal. For the
year as a whole, we expect GDP growth to be around 6.5% with possible upside,
implying a residual of 7.2% for the fourth quarter." The Total Investment & Insurance Solutions
According
to the Bank, a slowdown mainly in the agricultural sector is likely to be
compensated by a higher growth rate expected in industrial sector and services.
It says, "An expected strong rebound in the industrial sector,
particularly manufacturing, as the transient effects of GST fades away,
corroborates well with improvement in corporate earnings and other fast moving
indicators such as IIP and PMI for the third quarter. While service sector will
be benefitted from a favourable base impact, sequential recovery in most of the
lead indicators for the sector such as bank deposit & credit, cargo handled
at major ports, passengers carried by domestic airlines and foreign tourist
arrivals and government expenditure bode well for our expectations."
Commenting
on the agriculture sector, HDFC Bank says, based on a 2.8% dip expected in
Kharif crop output in 2017-18, as per the first Advance estimates, a continued
lag in area under Rabi cultivation (642.88 lakh hectares as against 648.2
covered in the corresponding period last year) and an unfavourable base effect,
it expects growth in the agricultural sector to remain tepid in the third
quarter as well. The Total Investment
& Insurance Solutions
For
FY2019, the report expects GDP growth to pick up to 7.3% from 6.5% in FY18 on
the back of an improvement in private consumption demand, increase in capacity
utilization rates and revival of the private capex cycle. Push from government
spending is likely to continue in FY19 with its share in GDP likely to rise to
11.7% from 11.2% in FY18, it added.
It
says, "On the supply side, assuming a normal monsoon and a favorable base
effect, agriculture growth is expected to grow by 3-4% in FY19. Rising farm
output, coupled with higher MSPs announced by the government are likely to
improve farm incomes and rural consumption. In the non-Agri sector, we expect
manufacturing growth to continue its upward climb, benefitting not just from
rising domestic demand but also the improving global environment. We expect
export growth to pick up to 5% from 4.4% in FY18. That said, higher import
growth (expect a rise not just in oil imports but also non-oil non-gold
imports) is likely to keep the net exports contribution to GDP
subdued."
"Overall,
we are optimistic about the growth outlook in FY19 as the economic recovery gains
momentum and the effects of the demonetisation (DeMo) shock and goods and
services tax (GST) related disruptions fade away. A statistical base effect
will be favourable at least in the first half of FY19," the report
concluded.The Total Investment & Insurance
Solutions
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