EUR 125.00 For Business Accounts Only

MOSL: ECOSCOPE-3QFY19 GDP growth in line with expectations

ECOSCOPE: 3QFY19 GDP growth in line with expectations; Low inflation and weak growth in 2HFY19 to provide room for a rate cut

 

• Real GDP growth decelerated to a six-quarter-low of 6.6% in 3QFY19 – marginally better than our expectation of 6.4%, but slightly below consensus of 6.7%. Government consumption expenditure (GCE) and private consumption expenditure (PCE) grew slowly in 3QFY19, while investments (GCF) continued growing strongly in the quarter.
• Real GVA grew by 6.3% (our estimate/consensus: 6.2%/6.5%), lower than +6.8% in the previous quarter, on account of deceleration in agriculture growth. Non-agri-GVA growth remained unchanged from the previous quarter at 7.2%.
• Investments grew 10.5% in the quarter on account of double-digit growth in the private sector (households + corporate) capex; government capex declined sharply. Implied domestic savings declined to 27.0% of GDP in 9MFY19 from 27.5% in the year ago period.
• Government revised down its full-year FY19 GDP growth projection from 7.2% to 7% – exactly in line with our forecast. This implies that it expects GDP growth at 6.5% in 4QFY19. We continue believing that a rate cut is highly likely in the April policy meeting. With inflation at ~2% and growth at sub-7% in 2HFY19, the clout for a 50bp cut could rise.