EUR 125.00 For Business Accounts Only

MOSL: ECOSCOPE-Economic activity at 102-month weakest in Sep’19; Expect real GDP growth of ~4.8% in 2QFY20

ECOSCOPE: Economic activity at 102-month weakest in Sep’19; Expect real GDP growth of ~4.8% in 2QFY20

 

• Our in-house Economic Activity Index (EAI) for India's real GVA (called EAI-GVA) suggests that economic growth weakened to 2.9% YoY in Sep'19, the lowest since the series began in Apr'11. The weakness was again broad-based; farm activity declined slightly and non-farm economic growth was only 3.3% in Sep'19.
• EAI-GDP growth also weakened to 3.4% YoY in Sep'19 (and 4.7% a year ago) from 3.7% YoY a month ago, driven primarily by another sharp decline in investments. Consumption activity, on the other hand, posted decent growth, almost entirely supported by fiscal spending, while private consumption remained muted.
• Overall, notwithstanding the strong ~25% YoY real growth in fiscal spending in 2QFY20, the record ~8% YoY decline in investments in more than two decades dragged EAI growth. Consequently, while we believed that GDP growth had bottomed out in , we now expect growth to weaken further to ~4.8% YoY in 2QFY20. If the official data (to be released on 29th Nov’19) confirms our assessment, then the full-year growth forecast will be, yet again, revised downwards.