GDP numbers do not disappoint but in fact inspires the market: SBI Ecowrap

The State Bank of India’s research report Ecowrap stated that the GDP numbers released on Tuesday evening do not disappoint, considering the persistent inflationary pressure and recalcitrant Omicron variant shadowing activities of last quarter.

The Ministry of Statistics & Programme Implementation (MoSPI) on Tuesday released the GDP numbers. India's gross domestic product (GDP) grew at a slower pace at 4.1 per cent in the January- March quarter. For the full fiscal year, the GDP is estimated to grow at 8.7 per cent in 2021-2022 as compared to a contraction of 6.6 per cent in 2020-21.

“During Q4, apart from manufacturing, all other sectors showed positive growth. Manufacturing declined by 0.2% indicating the slight impact of Omicron variant induced lockdowns. Construction also showed tepid growth of 2.0%. The sequential seasonally adjusted GDP growth is lower than the non-seasonally adjusted GDP growth for Q4 over the past. In FY22 Q4, real GDP growth is 6.7% qoq, however the seasonally adjusted real GDP growth is only 0.71%, showing only a modest improvement over the past quarter and loss of growth momentum,” it stated.

The report added that ‘trade, hotels, transport, communication & services related to broadcasting’ is the only sector not out of the woods. The absolute numbers of this sector is still 10.3 per cent lower than the pre-pandemic level. It stated that by Q1 FY23 this sector is likely to cross the pre-pandemic level.

“The gap between the nominal GDP growth and the real GDP growth has increased between Q2 FY20 and Q1 FY22 owing to higher inflation. It moderated in Q2 and Q3 FY22 but increased modestly in the last quarter of FY22. The growth in deflator has increased modestly to 10.4% yoy in Q4 FY22 compared to 9.8% in the previous two quarters,” the report stated.GDP numbers do not disappoint but in fact inspires the market: SBI Ecowrap

Credit off-take has happened in all the sectors, it added. “Personal loans segment continued to perform well, registering acceleration in growth to 14.7% in April 2022 and contributes around 90% of the incremental credit during the month, primarily driven by ‘housing’, ‘vehicle loans’ and ‘Other personal loans’ segments. Customers, especially in retail verticals could be having a feel of future run expected in interest rates, and might be front loading their purchases in days to come giving a fillip to consumer demands in select niche areas,” it said.

Also read: FY22 GDP growth could be 8.2-8.5%; Q4 at 2.7%: SBI Ecowrap