According to a report by SBI Research, the Gross Domestic Product (GDP) is expected to grow by 8.5 per cent in the financial year 2021-22 and 2.7 per cent in the March 2022 quarter. It, however, said that the GDP estimates for Q4 FY22 are clouded by significant uncertainties. The GDP figures for the January-March quarter are due to be released on May 31.
“We anticipate GDP growth at 8.5 per cent for FY12 and 2.7 per cent in Q4 of FY12. However, we believe that the GDP projection for Q4 FY22 is surrounded by significant uncertainties. For example, a fall in the GDP estimates for the first quarter of FY22 from 20.3 per cent to 1 per cent, with all other things remaining unchanged, could lead to a fourth quarter GDP growth rate of 3.8 per cent.
It said that given the strong growth in tax collections, the gap between GVA and GDP numbers in the fourth quarter could push the GDP numbers significantly, even if the gross value added (GVA) is very low.
“Economic activity, which gained strength in Q2 FY22 with a second wave decline, has lost momentum since Q3, accelerated by the spread of the Omicron variant in Q4. However, the beneficial effects of the rapid fluctuating transition from geopolitical conflicts since February’22. CPI inflation moved above the upper tolerance band as adverse base effects tend to coincide with the onset of a supply shock as the conflict escalates,” it said.
India’s gross domestic product (GDP) grew by 5.4 per cent in the December 2021 quarter, down from 8.4 per cent growth in the previous quarter. However, this was much higher than the 0.5 per cent growth seen in the corresponding period of the previous financial year 2020-21. GDP grew by 1.6 per cent in the fourth quarter of FY11.
“As per our (SBI) ‘nowcasting model’, the projected GDP growth for Q4 of FY22 will be 2.7 per cent, with a decline,” the report said.
However, it added that the Indian economy’s recovery remains resilient, though the risks posed by global growth thwarted the momentum. Inflation risks have increased in recent months. “Rise in international commodity prices also provides net terms of trade shock which is widening the trade and current account deficit.”
On corporate earnings, it said that the early trend of Q4FY22 results reported better growth numbers in parameters than contraction in operating margins due to higher input costs as compared to Q4FY21.
“Sectors like steel, FMCG, chemicals, IT-software, auto ancillary and paper registered better growth numbers. However, sectors like Automobiles, Cement, Capital Goods- Electrical Appliances, Edible Oil etc. registered a growth in revenue in Q4 of FY22, but registered negative growth in PAT as compared to Q4 of FY22. done.
Meanwhile at the global level, while the average real GDP growth for the 25 economies of 5.5 percent in the first quarter of 2022 is slightly higher than the previous quarter, the GDP growth of the major economies (USA, France, Italy, Sweden, etc.) ) is suddenly reversing. The US economy unexpectedly contracted in Q1 2022 (on a sequential basis) amid a resurgence in COVID-19 cases and a fall in pandemic relief funds from the government. This is the first decline in GDP since the short and sharp pandemic recession nearly two years ago.
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