Economists peg India's Q4 GDP at 4.8%

Economists on Monday forecast a sub-five per cent readings in the March quarter GDP, pulling down the overall economic expansion in FY13 to a decadal low of around five per cent.

Credit Suisse Director and Chief Economist Robert Prior-Wandesforde pegged the March quarter GDP growth at 4.8 per cent, which is also concurred by Nomura and DBS.

The government will announce the FY13 GDP numbers on May 30, where it expects the readings to be around 5.2 per cent.

Till the third quarter, the economy grew 5.1 per cent, with the Q1 being the highest at 5.5 per cent and Q3 being the lowest at 4.5 per cent.

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"The GDP growth for the March quarter is expected to remain soft at 4.8 per cent, due largely to a reduction in government spending, but we are hopeful that the lower interest rate environment and improving investment should result in better growth numbers from the June quarter," Prior-Wandesforde said in a research note.

However, Nomura India chief economist Sonal Verma in a note pegged the growth expectation at a lower 4.5 per cent during the period, citing the cut in government spending that began in the third quarter besides weaker consumer demand and subdued investment activities.

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But she said moderation in WPI inflation, which hit a three-year low at 4.9 per cent in April, amid weak demand should pave the way for lower interest rates.

DBS Bank group economist Radhika Rao in a note also pegged Q4 GDP at 4.5 per cent and the overall growth under 5 per cent.

"After a dismal 4.5 per cent in the December quarter, we expect the final quarter number to register another sub-5 per cent, at 4.7 per cent, despite the slight improvement in the underlying momentum.

"This should lead the headline reading for FY13 at 5 per cent," Rao said.

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From the sectors/industry angle, much of the support should stem from stabilisation in factory output primarily led by capital and manufacturing goods production, Rao said, adding in the in Q4, the factory output grew 1.8 per cent, up from 0.8 per cent a year ago.

While the underperformance of the mining sector remains worrying as output contracted 4.2 per cent in Q4, pick up in capital goods and consumer goods production are expected to contribute to the headline improvement in overall growth, she noted.

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Rao said farm output is also likely to remain stable during the period, while services moderated in line with easing demand dynamics.

However, she warned that the consumption trend is likely to remain sub-par as signalled by de-growth in the auto production figures.

She, however, termed improvement in exports a bright spot.

"But overall, there is little to suggest that the economy will witness a V-shaped recovery, though the lead indicators suggest that activity has likely bottomed out," Rao said.