Barclays Pegs Q1 GDP Growth Rate at Close to 6%

British brokerage Barclays announced here today in a note, that it expects a pleasant surprise in the June quarter GDP growth rate and the number may even touch 6 per cent due to emergence of "green shoots" in the economy.

"GDP growth is set to spring a near-term upside surprise and will likely reach close to 6 per cent in the June quarter," Barclays said in a note, adding that for the year as a whole, there is an "upside risk" to its estimate of 5.6 per cent.

It said that a growth rate of 6 per cent, which has not been seen by the country in the last two years, is more "likely to be sustained" during the second half of this calendar year.

The government is expected to release Q1 data later this month and the consensus growth forecast for the fiscal is around 5.5 per cent.

The note from the brokerage comes a day after core sector growth surged to a nine-month high of 7.3 per cent for June, indicating that there would be a healthy increase in the industrial production.

Earlier in the day, HSBC said that the manufacturing Purchase Managers' Index (PMI) for July hit a 17-month high at 53.

Barclays said that the ongoing improvement is driven by a gradual pick-up in utilities, domestic trade and social spending, as well as consumer durables.

It may be noted that indicating higher public spending, the government said yesterday that its fiscal deficit had touched a whopping 56.1 per cent in Q1.

"We remain hopeful that capacity addition and improving utilisation in the power sector, ongoing increase in coal production and signs of larger coal imports in the near-term will help sustain the uptick in growth," Barclays said.

It underscored the need for better co-ordination and time- bound project clearances, saying this would help some projects get off the ground during the next 12 months.