Indian Economy To Grow At 4.6% In September Quarter, Says Standard Chartered Bank
The lender also expects the RBI’s monetary policy committee to cut benchmark interest rates by 15 basis points next week.
India’s economic growth may decline for the sixth straight quarter in the three months through September, according to Standard Chartered Bank.
The GDP growth would slow to 4.6 percent dragged by weakness across industrial activity and services sector, Anubhuti Sahay, head (South Asia Economic Research) at the bank, said.
“We’re looking at multi-year low number to be printed tomorrow as all sectors across the economy suffered during the quarter,” Sahay told BloombergQuint in an interview. “Services (sector growth) may be at one of its lowest levels in this current series, industrial growth could be at a two-year low and agriculture is unlikely to shine due to the weather disruptions.”
That comes amid the spluttering of India’s consumption engine with rural population tightening their purse strings while automakers indulging in production cuts as sales declined. The government responded by cutting corporate taxes, which was complemented by the Reserve Bank of India’s five interest rate cuts so far this year.
Economic growth, however, may rebound to over 6 percent in the second half of the ongoing fiscal on the back of a favourable base and stabilisation in U.S.-China trade sentiment, she said.
India’s GDP growth for 2019-20 is expected to hit a nine-year low of 5.3 percent, primarily because the first half has been weaker than our expectations.Anubhuti Sahay, Head (South Asia Economic Research), Standard Chartered Bank.
RBI’s December Policy Meet
The bank also expects the central bank to cut its benchmark interest rate by 15 basis points at its monetary policy committee meeting next week. The unconventional rate cut is to strike a balance between weak GDP growth numbers and inflation that has started to inch higher.
“Also, MPC’s forecast for GDP growth for the year is 6.1 percent,” she said. “Unless the second quarter GDP surprises everyone on the higher side, it will be very difficult for India to grow at 6 percent.”
Watch| Standard Chartered Bank’s Sahay on what is expected from RBI’s December policy meet.