Nomura Sees India’s GDP Growth Slowing To 5.7% In April-June 2019
A worker walks past a billboard displayed on a construction barricade in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Nomura Sees India’s GDP Growth Slowing To 5.7% In April-June 2019

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India’s economic growth is set to slow further to 5.7 percent in the April-June quarter of 2019, financial services firm Nomura Holdings Inc. said in a report on Wednesday.

Nomura cited a consumption slowdown in India, weak investments and an under performing service sector as reasons for its bearish India GDP growth forecast.

The Indian economy, however, is seen rebounding in the July-September quarter.

"High-frequency indicators continue to show familiar pain points—a deep contraction in consumption, weak investment, a slowing external sector and an underperforming services sector," Nomura said in a research note.

But some indicators are showing early signs of bottoming out. Data for July shows that 53 percent of indicators have improved compared with 31 percent in June, Nomura said in the report.

Nomura's Composite Leading Index for July-September has risen marginally to 99.9 from 99.8 in April-June, led by higher industrial production growth, an improvement in visitor arrivals growth, equity markets and lower policy rates.

"While the concurrent state of the economy remains quite concerning, nascent signs of greenshoots and positive performance of leading indicators provide some signs that a recovery may be slowly materialising," the Nomura report said.

There are signs that the current slowdown in the economy may be deep. Consumer confidence is waning, foreign direct investment has plateaued, and international trade and currency wars are aggravating the problem.

To take stock of the state of the economy, Finance Minister Nirmala Sitharaman has held several meetings with officials and industry leaders. They have asked for a Rs 1 lakh stimulus package to boost consumer demand and private investments.

Nomura, however, sees limited fiscal space for any substantive stimulus.

"We currently expect GDP growth in April-June to slow to 5.7 percent YoY from 5.8 percent in January-March, before improving to 6.4 percent YoY in July-September and 6.7 percent in October-December," it said, adding that it was closely watching for signs of sustainability of the growth turnaround.

The Central Statistics Office will come out with the GDP data for the April-June period on Aug. 30. India's GDP growth slowed to 6.8 percent in 2018-19—the slowest pace since 2014-15.

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