New Delhi: Leading economists have pegged the economy on an upward trajectory with a high growth rate of 13-15.7 per cent in the first quarter of 2022-23.
State Bank of India’s group chief economic adviser Soumya Kanti Ghosh on Tuesday said she expects GDP to exceed 15.7 per cent in the first quarter, with the final number likely to be higher, while chief economist Aditi Nair Ratings Agency Icra said that the economy will grow at a rate of 13 percent in the June quarter.
The Office for National Statistics will announce the GDP figures for the first quarter at the end of next week. While the first wave of the pandemic resulted in a 23.9 per cent decline in GDP in June 2020, a high boost was given to the clipping at 20.1 per cent in June 2021, while the period was more disastrous in terms of loss of life from the second . COVID-19 wave. The Reserve Bank-led Monetary Policy Committee in its policy review on August 5 had projected the economy to grow at 16.2 per cent in the April-June quarter.
According to SBI Research, GDP is expected to be printed at 15.7 per cent in the first quarter, with huge upside potential. If it does, it expects an increase in the central bank’s growth projections for FY13 to 7.2 per cent. The high base effect as well as the effects of heatwave on wheat production, geopolitical issues and increased demand/margin on commodity prices will lead to a decline. ICRA’s Nair said the pace of growth in the first quarter was 13 per cent and gross value added stood at 12.6 per cent.
ICRA expects sectoral growth to be driven by the services sector which will register a growth of 17-19 per cent, followed by industry (9-11 per cent). The SBI report said the 41 high-frequency key indicators it tracks grew by 89 per cent in Q1 compared to 75 per cent in Q1 FY22, reflecting strong and broad-based growth momentum. it shows. In Q2FY23, the leading indicators are bullish with 81 percent of the indicators available for which data is showing an upward trend from Q1FY22. Importantly, private final consumption expenditure in real terms which declined significantly from Rs 4.77 lakh crore in Q1FY21. Ghosh said that in Q1FY22, the epidemic got cured by 46 percent.
The remaining 54 per cent demand would have also exceeded 54 per cent in the first quarter of FY13, indicating a strong recovery in consumer demand, especially in services, which has helped in potentially strong Q1FY23 numbers. It also accounted for 6.8 per cent of the total GDP contribution in Q1FY23. While Nair feels that the economy is still being hit by the ongoing war in Ukraine, which has now entered its sixth month, Ghosh sees the impact of the war on the global macroeconomy, which is soft for now, though he Admits that the conflict is affecting direct trade, energy and commodity prices, confidence and policy responses, especially in China.
According to ICRA, there has been a recent shift in demand from discretionary consumer goods to contact-intensive services for middle to high income groups.
This, coupled with an emerging caution in export demand, and the impact of higher commodity prices on volumes and margins for the industries, is likely to result in relatively moderate industrial growth.
Additionally, the impact of the heat wave on wheat production is likely to reduce agricultural growth in the first quarter. Overall, Nair expects the June quarter growth to be higher than the 16.2 per cent projected by the Monetary Policy Committee of the Reserve Bank.
She also feels that the recent moderation in commodity prices will ease margin pressure along with inflation and translate into better demand for discretionary goods and higher value-added growth.
Based on this, she forecasts second quarter growth of 6.5-7 percent, higher than MPC’s forecast of 6.2 percent for that quarter.