5 things to watch for in the latest economic growth numbers
India’s GDP data for the March quarter of 2022, which has seen challenges such as the third wave fueled by Omicron and high commodity prices which have pushed up input costs for businesses, will be released on Tuesday 31 may. Almost all analysts predict that growth from January to March 2022 will be lower at 2.7-4.5% compared to the 5.4% recorded in the previous quarter. Here’s what to look out for in the latest GDP numbers:
Agriculture growth was largely unaffected during the pandemic. It provided positive growth while all other sectors posted negative growth during the lockdown. However, in its report, the Bank of Baroda said agriculture growth may be a little slow in the fourth quarter compared to government expectations (3.3% vs. government estimate of 3.5%) due to the decline in the yield of wheat crops, the conflict between Russia and Ukraine. and scorching conditions. These could pose a downside risk to these projections.
Rating agency Icra said: “The heat wave had a negative impact on wheat production in March 2022. We expect agriculture and industry to show GVA growth below 1% in the fourth quarter of fiscal year 2022.” Gross value added is GDP less net taxes on products.
GVA (gross value added) growth in the agricultural sector was slow at 2.6% in the third quarter ended December 2021, compared to 4.1% a year ago.
Growth in manufacturing/industrial sector
Manufacturing growth has been hit hard during the coronavirus pandemic. GVA growth in this sector remained almost stable at 0.2% in the third quarter of 2021-2022, compared to growth of 8.4% a year ago.
During the March 2022 quarter, the industrial sector experienced a limited impact from the third wave. However, manufacturing volume growth remained subdued in the fourth quarter of fiscal 2022. Now, with the Russian-Ukrainian conflict and further shutdowns in China in March 2022 driving global commodity prices soaring, the agency Icra rating expects marginal value added growth in the industrial sector in the fourth quarter of fiscal 2022, held back by manufacturing and construction. He expects the industry to show GVA growth of less than 1%.
In services, trade, hospitality, transport, communication and broadcasting-related services have been the hardest hit during the pandemic. The hospitality industry has almost come to a standstill with no footfall due to the COVID-19 lockdown and restrictions. The sector saw some recovery in the December 2021 quarter with growth of 6.1%, compared to a contraction of 10.1% a year ago. Icra expects services growth to be around 5.4% in the March 2022 quarter.
Investment and infrastructure
Gross fixed capital formation is an indicator of investment activity in the country. A growth in GFCF indicates a jump in investments in the country. Now that the country is seeing an outflow of foreign portfolio investment, that data would be closely watched in the latest figures. GFCF grew by just 2% in the December 2021 quarter.
Private final consumption expenditure is the largest component, accounting for 60 percent of GDP. Its movement has a huge weight on the whole GDP. It increased by 7% in the December 2021 quarter. General government final consumption expenditure in December 2021 provided support by increasing by 3.4% in October-December and is expected to increase by 4.8% year on year. annually in fiscal year 22.
Analysts gave a wide range of GDP growth forecasts ranging from 2.7% to 4.5% for the quarter. SBI forecasts growth of 2.7% for the fourth quarter of 2021-2022, the rating agency Icra forecasts growth of 3.5% and CRISIL forecasts it at 4.5%. For the full fiscal year 2021-22, the Asian Development Bank (ADB) has forecast India to grow at 7.5%, while the International Monetary Fund (IMF) expects it at 9%.
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