Sell Your Products Online

Get your Business eCommerce Website
Easy to manage products online

GDP Data Coming Today: Five Things To Look Out For In Q3 Growth Numbers

GDP

The third quarter GDP numbers will be released today at 5.30 pm. Expectations of a recovery abound even as estimates show that the economy may not have bottomed out in the second quarter and that sluggishness may have persisted well into the third quarter. A few forecasts, however, predict that growth will pick up marginally to 4.7 per cent in the December quarter of FY20 from 4.5 per cent recorded in the September quarter.

Here are the five indicators to look out for in the data that will be made public today:

Consumption growth
Consumption is the bulwark that accounts for more than half of India’s economy. The current slowdown has been attributed to a collapse of consumption as is evident in the muted growth of auto sector and other durable and non-durables.

Consumption growth, as reflected by Private Final Consumption Expenditure, showed a slight improvement in second quarter at 5.1 per cent compared to 3.1 per cent in the June quarter. But it was well below the nearly ten per cent recorded in the second quarter of the previous year.

The hope is that the slight uptick led by festive demand could boost this number further. A turnaround in this area will be the key to India’s economic revival.

Investment growth

Investment growth (Gross Fixed Capital Formation) collapsed to just one per cent in the second quarter compared to an almost 12 per cent growth registered in the same quarter last year. Investments are key to the revival of the economy because these are one of the key enablers that kick off the virtuous cycle of job creation which in turn shores up consumption demand, as was pointed out by last year’s Economic Survey. Investments have taken a severe hit this year on account of falling bank credit, crisis in the NBFC sector and tepid sentiment. The contraction seen in the capital goods sector in the second quarter spilled into the third quarter as well indicating that investment growth may not have improved much in the three months under review. The cut in the corporate tax effected in September last year could have led to some uptick in investment. That, however, will only be clear after the GDP numbers have arrived.

Manufacturing

A major pain point has been the lacklustre growth of India’s manufacturing sector. The slide in manufacturing growth — as seen in the factory output data — has been a matter of concern, and the picture doesn’t look inspiring in the third quarter as well. Manufacturing had shrunk by one per cent in the second quarter. Manufacturing output remained weak in the third quarter despite showing some improvement in the month of November when it grew by more than 2 per cent, thereby pulling the overall factory output out of the negative territory after three months.

Construction

The government has acknowledged in the Parliament that the growth slippage in the current year is on account of slowdown in manufacturing and construction sector.

The growth of GDP has declined largely due to low growth in manufacturing and construction sector, minister of state (independent charge) for statistics and programme implementation Rao Inderjit Singh said in a written reply. Construction growth is seen slipping to a six-year low of 3.2% in FY20 from 8.7% in the last fiscal. Construction grew at just 3.3 per cent compared to 8.5 per cent in the same period last year.

Financial, Real Estate and Professional Services

This is another key sector where growth slipped on account of weakness in real estate and bank credit as well as the troubles of the NBFC sector. The sector grew at 5.8 per cent in the September quarter on account of weakness in bank credit growth. Sluggishness in the real estate sector and muted growth in bank credit are likely to slow down the sector in third quarter.

SOURCE: bit.ly/2T5wUSu

Views (841)

Leave a Comment

Leave a Reply

Your email address will not be published. Required fields are marked *


0 Comments