Q3: GDP likely to grow at 5.8 pc

Mumbai: The country’s gross domestic product (GDP) is likely to grow at 5.8 per cent in the third quarter of fiscal 2022, according to an SBI’s research report- Ecowrap. The country’s economy expanded by 8.4 per cent in the second quarter of 2021-22, to cross pre-pandemic levels.

However, the GDP growth in July-September period was slower than the 20.1 per cent expansion in the previous quarter. The National Statistical Office (NSO) will declare the GDP estimates for Q3 FY 2021- 22 on February 28. “As per SBI Nowcasting Model, the forecasted GDP growth for Q3 FY22 would be 5.8 per cent, with a downward bias. The full year (FY22) GDP growth is now revised downwards to 8.8 per cent from our earlier estimate of 9.3 per cent,” the report said.

The Nowcasting Model is based on 41 high frequency indicators associated with industry activity, service activity, and global economy. The real GDP will be around Rs 2.35 lakh crore more / 1.6 per cent higher than the FY20 real GDP of Rs 145.69 lakh crore. The report said the recovery in domestic economic activity is yet to be broad-based, as private consumption remained below pre-pandemic levels. The high frequency indicators suggest some weakening of demand in Q3 also continuing to January 2022, reflecting the drag on contact-intensive services.

Rural demand indicators, say two-wheeler and tractor sales, continued to decline since August 2021. Amongst the urban demand indicators, consumer durables and passenger vehicle sales contracted in Q3, while domestic air traffic weakened in the wake of Omicron variant spread. Investment activity though, is displaying a traction in pick up, with merchandise exports remaining buoyant, it said. The report said this slower growth momentum reconfirms recent assertion that incipient growth recovery needs to be supported by accommodative policy.