India’s second quarter gross domestic product (GDP) growth may further reduce to 4.2 per cent due to low automobile sales and air traffic movement, flattening of core sector growth and fall in investment in construction and infrastructure, and the growth forecast for fiscal 2019-20 is 5 per cent, down from 6.1 per cent earlier, according to the State Bank of India (SBI).
India's GDP was already at the six-year lowest of 5 per cent in the first quarter of this year.India's second quarter gross domestic product growth may further reduce to 4.2 per cent due to low automobile sales and air traffic movement, flattening of core sector growth and fall in investment in construction and infrastructure, and the growth forecast for fiscal 2019-20 is 5 per cent,down from 6.1 per cent earlier, according to the State Bank of India.#
State Bank of India (SBI) has joined several other organisations like the Asian Development Bank, the World Bank, the Reserve Bank of India and the International Monetary Fund in downgrading India's 2019-20 growth rates.
"Based on our composite leading indicator that suggests the GDP growth to slow down further from 5.0 per cent in Q1 of FY20 to 4.2 per cent on account of low automobile sales, deceleration in air traffic movements, flattening of core sector growth and declining investment in construction and infrastructure", SBI said in a report.
"Our 33 high frequency leading indicators reveal an acceleration rate which was 65 per cent in Q1 FY19 declined sharply to 27 per cent in Q2 FY20. Besides that, Skymet also reported that the country as a whole received 110 per cent of the long period average (LPA) of 89 cm of rainfall during the four-month-long southwest monsoon period, making it to the above normal category,” Indian media reports quoted the SBI document as saying.
"We expect Q2 GDP growth at 4.2 per cent. Our acceleration rate for 33 leading indicators at 85 per cent in October 2018 is down to just 17 per cent in September 2019, with such decline gaining traction from March 2019....Even IIP [index of industrial production] growth number for September 2019 was 4.3 per cent, which is quite alarming. We are revising our GDP forecast for FY20 to 5 per cent from 6.1 per cent earlier," the SBI Ecowarp said.
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