B. Prasanna, Group Executive and Head – Global Markets Group, ICICI Bank on the GDP estimates for Q2FY19.
“Second quarter GDP growth at 7.1% was much lower than expectations. This was primarily on account of a sharp weakness in agricultural growth. On the positive side, consumption growth and investment growth remained strong, even as consumption moderated sequentially. Government spending has also provided some support to the numbers. However, on the sectoral side, the trade, hotels component and the financial services component slowed down much more than expected. Gross value added net of agriculture and government spending moderated sequentially, indicating a slowdown in core activity as well. We had only expected the growth to slow down meaningfully from Q3 onwards, especially given that the base effect in Q2 was fairly supportive. However, in light of the current Q2 print and signs of slowdown in high frequency indicators, our FY2019 forecasts of 7.5-7.6% will have to be revised lower.”