GDP preview: growth likely to be sub-5%

Some relief expected on the agricultural front as the country had witnessed good rains this quarter

Lackluster industrial growth, low demand, contraction in exports, stalled investment projects are all indicators of a flat economic growth in the first quarter, according to analysts.

The GDP numbers will be released at 5 pm IST today.

Moody's Analytics, the research and analysis wing of Moody’s expects the Gross Domestic Product (GDP) growth for the first quarter to be at 4.5%.

In its report Dismal Scientist, it had said that the Indian economy has been steadily decelerating for the past three years and will further go down in the first quarter of this year.

According to foreign brokerage Bank of America - Merrill Lynch (BoFA-ML), in the current economic situation, the first quarter economic growth would stand at 4%.

Even Finance Minister P Chidambaram had said in a press conference last week that the first quarter GDP numbers could show a "flattish growth."

 

Various analysts tracking the sector also feel that growth would remain subdued. CARE Ratings chief economist Madan Sabnavis said that he expected the GDP growth at around 4.7%.

Soumya Kanti Ghosh, chief economic advisor at the State Bank of India expects the economy to grow below 5% level and could range in 4-7-4.8%.

In the fourth quarter of 2012-13, the GDP had grown at 4.8% and in the April-June period last year, the GDP growth stood at 5.4%.

In fact, the Gross Domestic Product (GDP) growth is likely to remain so in the second half as well. “There is no chance of a revival unless there are some signals of project announcements and investments picking up. At this juncture, the future is bleak

,” said D K Joshi, chief economist, CRISIL.

The broad indicators of growth suggest that the GDP growth is likely to remain flat. The exports contracted 1.4% in April-June 2013 and industrial growth also contracted 1.1%

 

in this period. Also, the average Purchasing Managers' Index (PMI) services for three months suggested that the there is slight growth in this sector as it stood at 52 points. A reading of more than 50 indicates growth, while one below it shows contraction.

A Reuters poll of 36 economists concluded that the GDP is expected to grow 4.7% in this quarter.

Zyfin, a financial information firm which has adopted its own methodology to compute GDP data has predicted the GDP to grow at 4.7%. However, experts said that there would be some relief on the agricultural front as the country had witnessed good rains in this quarter.