Indian economy likely to grow by 9% in next fiscal: Credit Suisse

New Delhi: Swiss brokerage Credit Suisse expects the economy to continue showing positive surprises and register a growth of up to 9 per cent in the next financial year. For the current fiscal also, the brokerage is projected to grow higher than the consensus estimate of 8.4-9.5 per cent and printing at around 10.5 per cent.

As a policy, Credit Suisse does not provide absolute growth numbers in its forecast. However, an extrapolation of available data and projections indicates that economic growth could fall to 9 per cent in the period 2022-23, which is up to 400 basis points (bps) above the consensus number, according to the brokerage.

Neelkanth Mishra, co-head of equity strategy for Asia Pacific and India equity strategist at Credit Suisse, told PTI that he expects a meaningful upgrade in the GDP forecast as the economic recovery has surprised positive.

“We expect a 4 percentage point upgrade in the consensus GDP for FY13 as production should be closer to the pre-pandemic trend than is currently forecast.

“The economy is expected to show positive surprises, even though the recovery has been one-sided so far, but most of the low-income jobs will also recover in the next three-six months,” Mishra said on Thursday.

Cautioning that higher energy prices could be a headwind, Mishra said the economy has the potential to sustain rapid import growth. Growth could slow down if imported energy prices (crude oil, gas, coal, fertilizers and palm oil) remain high.

Another stretch could be low employment/re-employment in some key sectors such as education, travel, construction materials and auto manufacturing, which have not yet returned to pre-pandemic levels. However, these should improve as the economy continues to open up, helped by high seroprevalence, he said.

According to him, other positives for higher growth are improving consumer spending, strong equity fund-raising which has helped in repairing the risk capital lost during the pandemic, increasing demand for IT globally and consequently recruitment of around 5 lakh and The uptick in housing construction.

On the markets, he said since the country’s price-to-earnings premium of 21 per cent on global equities and 72 per cent on emerging markets is already very high, the metric is unlikely to accelerate further.

He added that unlike the sharp fall in the markets in the pre-pandemic period, earnings forecasts for FY22 and FY23 have seen an upgrade and should be the same for FY24.

On the domestic front, the macroeconomic background is also supportive, with fiscal conditions improving following an 18 per cent increase in GDP in government debt during the pandemic.

In the first half of the current financial year, revenue receipts were 16 per cent higher than the full year estimate and the central government’s cash balance with the RBI as a share of GDP is 1.5-2 per cent higher than normal.

This scenario supports the revival of capital expenditure of the states. According to Credit Suisse, while higher energy prices are now draining a substantial balance of payments of US$40-45 billion, the rupee has fared much better than other emerging market peers. Read also: Got a special 10 paise coin? Sell ​​online to make thousands of rupees in a jiffy; testing process

Mishra also said that the risk from residual effects of the new COVID variant omicron or even the delta variant could be higher for the global economy than India, but did not elaborate. Read also: WhatsApp will soon allow crypto payments through Novi Wallet in the US

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