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MOSL: ECOSCOPE- GDP growth in 1QFY20 hit by broad-based weakness; Growth now estimated at only ~6% in FY20

ECOSCOPE: GDP growth in 1QFY20 hit by broad-based weakness; Growth now estimated at only ~6% in FY20

 

• Real GVA/GDP grew 4.9%/5.0% YoY in 1QFY20, much lower than consensus of 5.5%/5.7% (and our estimate of 5.5%/5.6%). Nominal GDP grew 8% YoY, marking lowest growth since FY12 (when this data was made available).
• It is important to note of some interesting details from today's data release. The sudden collapse in personal consumption expenditure (PCE) to ~3% YoY is not in line with four-quarter-high growth in 'trade, hotels & restaurants.' Investments growth weakened further, while government consumption expenditure (GCE) growth was much better at ~9% compared to almost stagnant growth suggested by .
• The only silver lining in today's data is that it marks the bottom and is expected to revive from 2QFY20. Nevertheless, lower-than-expected growth in 1QFY20 makes us revise our real GVA/GDP forecast for FY20 from 6.3%/6.5% to 5.9%/6.1% now (led by ~7% YoY in 4QFY20E). Further, another rate cut by the RBI (probably by 40bp) is very likely.