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MOSL: ECOSCOPE-1QFY19 GDP growth better than expectations; Growth likely to decelerate in 2HFY19

ECOSCOPE: 1QFY19 GDP growth better than expectations; Growth likely to decelerate in 2HFY19 as favourable base fades

 

• Real GDP grew 8.2% YoY in 1QFY19, in line with our estimate of ~8% but higher than market consensus of 7.6% (and RBI's forecast of 7.5%). Nominal GDP grew at a 15-quarter high of 13% YoY, in line with our estimate of 12.8%.
• Growth was largely driven by better consumption (up 8.4% v/s our estimate of ~7%) in 1QFY19. Investment growth of 8.6% - albeit healthy - was below our estimate of ~14% growth.
• Real GVA also grew 8% on account of a pick-up in industrial growth (+10.3%) and better agricultural growth of 5.3% (highest in 1Q of any year). Non-agri GVA growth came in at 8.4%, exactly in line with our forecast.
• The implied savings rate fell to 27% of GDP in 1QFY19, the lowest in any 1Q.
• Overall, high growth in 1QFY19 was driven by a favourable base, which will start fading going forward. We continue expecting a sharp slowdown in 2HFY19, implying ~7% growth for full-year FY19 - lower than consensus of ~7.5%.