India: Risks to the GDP still tilted to the downside – UOB

Barnabas Gan, Economist at UOB Group, assessed the latest GDO figures in India.

Key Quotes

“India’s GDP decelerated further to 3.1% y/y in the three months between January and March 2020 (4QFY19/20). This was better compared to market expectations of 1.6% y/y. Gross Value Added (GVA) growth also expanded by 3.0% y/y in the same period. With the latest print, India’s economy grew by 4.2% in FY19/20.”

“Government expenditure growth was the sole support of the economy, while other sectors saw further headwinds. Private consumption especially decelerated to 2.7% y/y, the slowest since 3QFY14/15, while gross fixed capital formation and trade contracted.”

“High-frequency data of late continue to spell a lacklustre period for India, suggesting a possibility for full-year economic to dip to negative territories should headwinds persist. Inflation outlook remains uncertain, although the path of least resistance is for it to soften into the year. As such, we keep our GDP outlook at 2.0% in the current fiscal year, with downside risk.”