India GDP growth forecast 2013 - 2014



With Indian macro in doldrums since the twin deficits went into uncomfortable zone and industrial growth came to an almost grinding halt, a slew of GDP downgrades have happened since July 2013. The numbers pegged by global rating agencies and financial institutions range from 4 to 5.7 percent for FY-14. The most recent downgrade came in from the stable of Asian Development Bank (ADB) which has lowered India’s growth projection for 2013-14 to 4.7 per cent from 6 per cent earlier, stating that the recent rupee depreciation and capital outflows could adversely impact the economy.

Growth Forecast for 2013-2014 (%)
RBI
5.5
HSBC
4.0
Goldman Sachs
4.0
PMEAC
5.3
Fitch
4.8
ADB
4.7
World Bank
5.7
IMF
5.6
InvestorZclub
5.0

The Reserve Bank of India has also lowered the growth projection for 2013-14 to 5.5 per cent from its earlier estimate of 5.7 per cent. World Bank has the most optimistic target of 5.7% while HSBC and Goldman Sachs forecasting the growth to be at 4%. 

InvestorZclub is expecting the growth rate to be at 5% plus minus 10 basis points. We have arrived at this number based on our expectations of 4.5% of GDP in first half while 5.5% in second half of the current financial year. We are expecting second half to be better broadly due to following reasons:


  • Industrial activity has started to pick up slightly since August as witnessed in positive IIP data.
  • Q3 is seasonally a very good quarter as most of the big festivals are lined up in this quarter.
  • India witnessed one of the best monsoon this year which will lift agriclutural output significantly thereby contributing to the GDP growth.
  • 2014 being the year of general election, the spending due to this could help notch up India's GDP by few basis points. 

A 5% GDP outcome for the whole of FY-14 and an expectation of 6% growth rate in FY-15 will be very favorable outcome for India and it's financial markets which, as we predicted earlier, could make Nifty and Sensex hit new high by July 2014.





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