Tag: economic growth

Moody's today(11 November 2022) slashed India's GDP growth projection for 2022 to 7 percent on the expectation that global slowdown and high domestic interest rates would dampen economic momentum. For India, the 2022 real GDP growth projections have been lowered to 7 percent from 7.7 percent. The downward revision assumes higher inflation, high-interest rates, and slowing global growth will dampen economic momentum by more than we had previously expected, said the Global Macro Outlook 2023-24. Moody's expects growth to decelerate to 4.8 percent in 2023 and then to rise to 6.4 percent in 2024. The Indian economy grew 8.5 percent in the 2021 calendar year, according to Moody's. As per official GDP estimates, the economy expanded 13.5 percent in April-June 2022-23, higher than the 4.10 percent growth clocked in January-March. GDP figures for the September quarter would be released at the end of this month. Read more

The IMF (International Monetary Fund) has cut India's economic growth forecast to 9 percent (from the earlier forecast of 9.5%) for the current fiscal year ending March 31, on concerns over the impact of a spread of a new variant of coronavirus on business activity and mobility. In its latest update of World Economic Outlook yesterday(25th Jan.2022), the international financial institution, which had in October last year projected a 9.5 percent GDP growth for India, put the forecast for the next fiscal FY23 (April 2022 to March 2023) at 7.1 percent. The Indian economy had contracted by 7.3 percent in the 2020-21 fiscal year. Read more

Indian benchmark indices opened lower today (20th Dec.2021) as investors continue to track the spread of the Omicron Covid variant. The World Health Organization recently warned that the number of cases is doubling in 1.5 to 3 days in areas with community spread. That apart, Asian stocks dropped in early trading today after China slashed its benchmark lending rate for the first time in more than one-and-a-half years. The move likely indicates policymakers' concerns around the slowing economic growth in China, which worried investors. The BSE Sensex quoted 653 points lower at 56,358 level while the Nifty50 broke below the 16,800-mark at 16,795, down 190 points. Both the indices were down over 1 percent each. In the broader markets, the BSE MidCap and SmallCap indices fell 2 percent each. Read more

Moody’s Investors Service in its latest report has projected that the economic growth in India will rebound strongly. It has pegged GDP growth for the nation at 9.3% and 7.9% in FY22 and FY23, respectively. Steady progress in Covid vaccination will support a sustained recovery in India’s economic activity, Moody’s analyst Sweta Patodia said. “Consumer demand, spending, and manufacturing activity is recovering following the easing of pandemic restrictions. These trends, including high commodity prices, will propel significant growth in rated companies’ EBITDA over the next 12-18 months,” Patodia added. India recently hit record Covid-19 vaccination rates. Moody notes that the vaccination drive in India has gathered pace after the second wave. Around 30% of the population of India is now fully vaccinated with two doses while around 55% of the population has received at least one dose. Improved vaccination coverage has led to stabilisation in consumer confidence. Read more

Smallcap companies are those that have a market capitalisation of less than the 250th stock on the stock exchange. With economic data improving, the corporate profitability of smallcap companies can be expected to improve. Investors looking for decent returns and having a higher risk tolerance can look to invest in small caps. When it comes to mutual funds, schemes that invest at least 65% of their portfolio in smallcap stocks can be deemed as smallcap funds. There are over 4,500 smallcap companies listed on the stock exchange in India. Though they have the potential to give investors good returns, it is advisable to stay invested in them for the long term to mitigate the risks. Actively managed to smallcap funds can outperform other segments of the market, especially during phases of economic recovery or growth. Historically too, the smallcap funds have managed to outperform other segments. Read more

Barclays, as measured by gross domestic product (GDP) has pegged India’s economic growth -for fiscal 2021-22 (FY22) – at 7.7 percent in the bear-case scenario, if the country is hit by the third wave of the Covid pandemic going ahead. The economic cost, it believes, could rise by at least a further $42.6 billion, assuming another round of similar stringent lockdowns is imposed across the country for eight weeks later this year. After factoring in recent developments, Barclays has pegged the economic cost of the latest shutdowns at $8 billion per week in May, up from $5.3 billion per week in the last two weeks of April, and well above the $3.5 billion a week estimated early in the second wave. “We believe these economic losses will remain steady at $8 billion a week through the month of May but expect them to ease from June,” Barclays said. Read more

GOI is considering recommending a looser inflation target for RBI, allowing it to focus more on economic growth despite price pressures, according to some sources. A consumer-price inflation band tracked by the Reserve Bank of India may be relaxed further from the current 2%-6% range. The government still needs to hold consultations with the central bank before finalizing a new framework sometime next year. The current mandate, set in 2016, requires the RBI to keep headline inflation at the 4% midpoint of its target range. The Finance Ministry is of the view that the RBI can’t be saddled with a rigid inflation targeting framework, especially in situations when growth needs to be pushed, as per the sources. Read more

Public sector banks in India will need external capital injection of Rs 1.9-2.1 trillion over the next two years to restore loss absorption capacity, according to Moody’s. The most likely source of capital to plug these capital shortfalls is the government, despite its completion of a large recapitalisation just a few months ago. Uncertainty surrounding India's economic recovery and the ongoing clean-up of balance sheets are making it difficult for banks to raise equity capital from markets, the rating agency said in a statement. "PSBs dominate India's banking system, meaning any failure could jeopardise financial stability Moody’s, said. The sharp slowdown in India's economic growth, exacerbated by the coronavirus outbreak, will hurt public sector banks' (PSBs) asset quality and drive up credit costs. The Non-Performing Loans (NPLs) ratio will rise to 14.5 percent by March 2022 from 11 percent as of March 2020.

Due to the adverse effect of coronavirus pandemic on the economy Steel consumption is expected to decline at least 10 percent for rated Indian steel-makers, says a report. Moody's Investors Service in the latest report has forecast a negative outlook for the steel industry in the Asia Pacific region. According to Moody's Investors Service, India's (Baa3 negative) economic growth will remain materially lower than in the past, with real GDP contracting 3 percent in 2020. "We assume that economic activity will gradually pick up in July. However, given the possibility for second or third waves of virus infections or deeper economic costs than currently factored in, the downside risk to these forecasts is significant," the agency said. Moody's estimates that lower GDP growth will translate into steel consumption falling at least 10 percent for rated steel-makers in the 12 months to March 2021.

Fitch Ratings, CRISIL, and SBI Research have drastically cut India’s economic growth forecast in the current fiscal year due to a prolonged lockdown. While both Fitch and CRISIL projected the economy to contract 5 percent, from their earlier estimates of the economic growth at 0.8 percent and 1.8 percent, respectively, SBI Research slashed economic contraction to 6.8 percent from earlier 4.7 percent. CRISIL said it expected the current quarter’s GDP to shrink 25 percent year on year. In its latest report, CRISIL said it would really be a long road to recovery, and going back to the pre-COVID-19 trend level of gross domestic product (GDP) in India will not be possible for the next three fiscal years. The lockdown extension, higher economic costs, and an economic package that lacked muscle are the three key reasons why CRISIL has downgraded the GDP forecast

Goldman Sachs and Nomura (Global research and broking houses) – have sharply cut their economic growth projections for India FY 21 and expect the RBI to cut rates sharply to stem the economic rout caused by the lockdown due to Covid-19 pandemic. Analysts at Goldman Sachs, for instance, expect the Indian economy to contract 0.4 percent in FY21 versus consensus median 2.7 percent following the extension of the nationwide lockdown. In April, they had expected the GDP growth to slip to 1.6 percent in FY21. Read more

India’s GDP growth in the October-December quarter of 2019 (Q3 of FY20) stood at 4.7 percent, as per the data released by the Central Statistics Office (CSO) on 28th Feb. The data also showed that projections for economic growth in FY2020 had been at 5 percent in the second advance estimates. The rate of the country’s economic growth had stood at a six-year low of 4.5 percent in the previous quarter (Q2) and 6.6 percent in the same quarter a year earlier (Q3 of FY19). India’s GDP growth in FY2019 had stood at 6.8 percent.