State Bank of India’s new Ecowrap report reveals that India’s Gross Domestic Product (GDP) will grow by 18% in Q1FY22 which is lower than the Reserve Bank of India’s expectations of 21.4%.
“Based on our (Nowcasting) model the forecasted GDP growth for Q1 FY22 would be around 18.5% (with upward bias). Our estimate is lower than RBI expectation of 21.4%.” The bank said in the report. It further added that expected growth in Q1FY22 is lower than the growth estimation of Q4FY21.
“The corporate GVA of 4069 companies registered a growth of 28.4% in Q1 FY22. However, this is lower than growth in Q4FY22, thereby corroborating the lower GDP estimate than what was thought earlier,” the report stated.
The corporate attributes lower GDP growth to a decline in mobility which in turn affects the economic activity.
According to the report, “The relationship between the two has become weaker as can be seen in Q1 FY22 when mobility has declined, however, GDP growth is high and positive. But higher YoY growth is mainly on account of the base effect.”
“The business activity index based on ultra-high-frequency indicators shows a further increase on August 21 with the latest reading for the week ended 16 August 21 at 103.3.” The company added.
SBI has developed the ‘Nowcasting Model’ with 41 high-frequency indicators associated with industry activity, service activity, and the global economy in collaboration with the State Bank Institute of Leadership (SBIL), Kolkata.