India’s GDP growth may slow down to 2.9% from 2.5% in the fourth quarter (Q4) of 2021-22, economists at the State Bank of India (SBI) have projected, nearing the 4.8% growth previously estimated by the Office of National Statistics. Half (NSO), which will release the official data on May 31.
While the NSO’s previous estimate pegged GDP growth at 8.9% in 2021-22, a report by Soumya Kanti Ghosh, chief economic adviser to SBI’s group, said that with the pace of economic activity slowing in Q4 to 8.2. The range of % and 8.5% is likely to be higher. Because of the Omicron wave and ‘geopolitical confrontation’ since February.
“Economic activity, which gained strength in Q2 of 2021-22, with volatility of the second wave, has lost momentum since Q3… Q4 GDP numbers are expected to be much lower than Q3 [when GDP grew 5.4%] This is indicative of a continued deceleration in growth since the start of the year,” the report said, adding that Q4 also marked a resurgence of retail inflation beyond the tolerance limit of 6%.
NSO had projected Q4 GDP at ₹41.04 lakh crore, up 1.7% over pre-pandemic levels, but an SBI model using high frequency indicators suggested it could be closer to ₹40 lakh crore. “According to our ‘nowcasting model’, the estimated GDP growth for Q4 of FY22 will be 2.7%, with a decline.” SBI’s growth forecast for Q4 is lower than the 3.5% rate recently estimated by rating agency ICRA.
While India’s recovery remains resilient, the momentum has been thwarted by risks posed by global growth, and runaway commodity prices that are ‘a pure terms of trade shock’, widening trade and current account deficits, the report said. has been emphasized. While the global growth outlook remains grim as the Ukraine-Russia conflict continues, the withdrawal of monetary housing is gaining momentum and emerging economies face the risk of capital outflows, it noted.
In terms of Gross Value Added (GVA) in the economy, SBI said that corporate GVA is positively related to manufacturing GVA, with a declining trend since Q4 of 2020-21. “The corporate results announced so far indicate that there has been only moderate recovery in corporate GVA in Q4 FY22. Corporate GVA of 3782 companies registered a growth of 15.2% in Q3 FY22,” the report said.