Data released by the National Statistical Office (NSO) on Wednesday showed the country’s GDP rose by an annual 13.5% in the April-June quarter of the current financial year, higher than 4.1% in the previous quarter but below 20.1% recorded in first quarter of 2021-22. The 13.5% growth was lower than RBI‘s estimate of 16.2% for Q1. It was also below market estimates. Finance secretary TV Somanathan has said the numbers are fully consistent with the 7-7.5% GDP growth estimate for the year.
SBI said it was revising its GDP growth forecast for 2022-23 to 6.8% from the earlier 7.5% and called for a relook at the manufacturing growth numbers as it is still indexed to 2012 base and there could be is gross misappropriation (or underestimation) of manufacturing sector growth. The manufacturing sector growth was at 4.8% in the June quarter compared to the 49% in the year-ago quarter.
Citibank said significantly weaker first quarter print has led them to revise their FY23 real GDP forecast downwards to 6.7%YY (vs 8.0% earlier). “While the extent of downward revision is unusually large, we would emphasise that this adjustment is mostly due to the negative Q1 GDP,” Citibank said in a note.
Goldman Sachs said considering the lower than expected reading, it was revising its calendar year 2022/fiscal year 2023 GDP growth forecast lower to 7.0%/7.0% year-on-year (from 7.6%/7.2% previously).
Morgan Stanley said GDP growth for the quarter ended June was weaker than its consensus estimates. “However, domestic demand remained relatively healthy. Lower-than-expected growth in QE June creates downside risk of 40 bps to our FY2023 growth estimates,” Morgan Stanley said in a note.
Global ratings agency Moody’s Investors Service has reduced its growth forecasts for G-20 economies to 2.5% in 2022 and 2.1% in 2023.
“Our expectation that India’s real GDP growth will slow from 8.3% in 2021 to 7.7% in 2022 and to decelerate further to 5.2% in 2023, assumimg that rising interest rates, uneven distribution of monsoons, and slowing global growth will dampen economic momentum on a sequential basis,” Moody’s said about India’s growth prospects.