Analysts forecast Q2 GDP growth rate at 6.4%


India’s gross domestic product (GDP) figures for the second quarter of fiscal year 2018 is all set to be released tomorrow, and analysts are estimating the value to be at 6.4%. This is relatively reassuring compared to the disappointing 5.7% GDP growth for the first quarter. The slowdown in the previous quarter sent a lot of ripples across the country with major criticisms against the government’s note-ban initiative.

GDP growth

According to economists at State Bank of India (SBI), GDP growth for the second quarter is likely to be higher and is expected to be around 6.3% to 6.4% with a downward bias. The reason for their optimism has been attributed to growth in various sectors after the effects of note-ban have waned off. The sectors affected by demonetisation have dragged down the GDP figures for the first quarter.

In addition to SBI economists, economists at Singapore-based brokerage firm DBS also estimated a 6.4% GDP growth for the second quarter. However, they have reduced the country’s GDP outlook for the entire fiscal year 2018 to 6.6%.

Various major financial service firms and credit rating organisations across the world have posted a positive future outlook for India. Most of these agencies say that the effects of various factors such as demonetisation and Good & Service Tax (GST) reforms are already easing now. Considering this, India’s outlook for future economic growth is relatively good.

The first quarter GDP growth of 5.7% represented a three-year low and caused slight panic about the country’s economic growth. A sharp decline in the industry performance following the note-ban is said to be the main reason behind this dismal performance.

The government is currently looking for ways to improve credit growth and increase performance in the country’s manufacturing sector. Certain measures such as recapitalisation of public sector banks and reduction in GST slab rates are already shaping up in the country. The government is also pushing for an interest rate cut by the Reserve Bank of India in order to boost credit growth in the manufacturing sector.


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