India’s Q4 Gdp Growth Likely to be Lower Than Previous Quarter

India’s Q4FY15 GDP is expected to clock growth at 7.3%, just a tad lower than the 7.5% growth recorded in the previous quarter. Given that India’s new GDP series has a very short history and is at odds with other relevant indicators, forecasting still remains a challenge. Nevertheless, while India’s economy has seemingly bottomed out, the recovery still seems quite wobbly. Lower oil prices apart, weak demand has meant consistently low inflation for manufactured products as manufacturers do not have adequate pricing power. This is also reflected in persistently weak IIP data as producers prefer to idle capacity and meet any surge in demand by drawing down on inventories rather than producing. Not surprisingly, capacity utilisation remains weak, though it has inched slightly above its low. Unseasonal rainfall and hailstorm has resulted in fairly extensive crop losses and agriculture sector performance is expected to remain quite muted, according to Societe Generale. Not surprisingly, corporate performance remains weak. An analysis of sales and profitability data for Q1 2015 shows that corporate performance remains one of the weakest over the past several quarters. Slow pick-up in corporate investment activity corroborates our view that while the economy will experience investment-led growth, the pace of recovery is likely to remain quite slow. 

The material has been provided by InstaForex Company – www.instaforex.com

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