Growth, Rate-Cut Revisions By Economists After Shock GDP Slump: Report
Economists cut their forecasts for India's economic growth and predicted deeper interest-rate cuts after data showed a sharper-than-expected slump in output.
Goldman Sachs Group Inc. and Citigroup Inc. lowered their growth projections to 6 per cent for the fiscal year through March 2020, while Oxford Economics Ltd. said there's a risk the expansion could be weaker than that.
Data late Friday showed gross domestic product rose 5 per cent in the June quarter from a year ago, the slowest pace in six years and lower than all the forecasts in a Bloomberg survey of economists. The weakness was broad-based, with consumption and export growth slowing while investment remained subdued.
The slump will put the onus on the Reserve Bank of India to continue cutting interest rates after 110 basis points of easing already this year, the economists said.
The government -- which is sticking to its 7 per cent growth projection for the fiscal year -- has in recent days announced a number of steps to improve India's longer-term growth, without providing any immediate support. It will merge state-run banks to help spur credit growth, ease foreign investment rules and give concessions on vehicle purchases.
Here's a look at the new projections from economists:
| Economist | New GDP forecast | Previous GDP forecast | Interest rate forecast |
|---|---|---|---|
| Citigroup | 6% | 7% | 25 bps cut in October, with 30% probability it could be higher |
| Goldman Sachs | 6% | 6.90% | 50 bps cut in 4Q vs previous prediction of 25 bps |
| Oxford | Below 6% | - | 75 bps rate cuts |
| Nomura Holdings Inc. | 6% | 6.50% | 40 bps cut in 4Q vs earlier projection of 15 bps |
| Bloomberg Economics | 6.60% | 7% | - |
| DBS Group Holdings Ltd. | 6.20% | 6.80% | 15-25 bps cut in both Oct. and Dec. |
(Source: Bloomberg)
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
-
'Never Seen This Level Of Negativity': Sandeep Tandon Says The Next Rally May Be Closer Than You Think
Veteran investor Sandeep Tandon says foreign selling is easing, large-caps are due a comeback and mid-caps are crowded, while he turns positive on gold, power and pharma this Diwali.
-
Indians Stay With Family, Not In Hotels | The Reason Why
India still lacks enough clean, reliable and affordable hotels for budget-conscious travellers.
-
The Economic Imperative: Analysing The Material Driving Force Behind India-Canada Strategic Reset
This economic complementarity is further reinforced by deep institutional investment ties and talent mobility, which form the bedrock of the bilateral framework.