InvestorQ : After the GDP data announcement, do you see the full year GDP being pulled lower?
Debbie Mascarenhas made post

After the GDP data announcement, do you see the full year GDP being pulled lower?

Answer
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Arti Chavan answered.
3 weeks ago


Since the GDP data was announced on 31 August, there have been a slew of downgrades by various brokerages and research houses. Nomura, HDFC and SBI, among others have downgraded India’s growth story for the full year deeper into the negative zone.

We can look at the concerns raised by SBI in its economic report. In fact, the SBI Research team has released a report warning that full year GDP contraction for fiscal 2020-21 could be much worse and could actually widen to (-10.9%).

This is much lower than the original -6.8% contraction estimated by SBI Research Team. The report points out that even the GDP growth for the September quarter would be negative in double digits, although it is likely to be better than the first quarter.

The big problem visible in the GDP data for the first quarter is that, apart from a robust performance by agriculture, manufacturing and services were under strain and are likely to continue to remain under stress. So, the lag effect on growth could continue longer.

SBI report expects contraction in the next few quarters as under in India, Q2 GDP 12-15%, Q3 GDP 5-10% and Q4 GDP 2-5%. The full year contraction would be close to 11% and it will be the first full year recession in 41 years since 1979.