India’s GDP growth rate in the first quarter of this fiscal year is likely to be around 6 per cent — the strongest pace of growth in last nine quarters, a Standard Chartered report says.
“We expect GDP growth to have picked up to 6.0 per cent y-o-y in Q1-FY15 (quarter ended June 2014). This would be the fastest growth recorded since March 2012 and much higher than 4.6 per cent y-o-y in Q4-FY14,” Standard Chartered said in a research note.
GDP data is due to be released on August 29.
Improvements in industrial activity and services sector mainly seems to have boosted GDP growth.
“Industrial growth (including construction) likely rebounded to 4.8 per cent y/y, after averaging 0.7 per cent in the previous eight quarters,” the Standard Chartered report said adding that services-sector growth probably picked up to 7.3 per cent y/y from 6.4 per cent in the previous quarter.
Moreover, one-off factors like rebound in exports growth and increased construction activity added to Q1 FY15 growth.
Export growth rebounded to around 7.5 per cent mainly driven by pent-up demand in the US and there was increased construction activity in June mainly due to delayed rainfall.
According to the global financial brokerage firm, though there has been marginal signs of improvement in some sectors, the buoyancy in the Q1-FY15 growth number should not be interpreted as a sharp and sustained improvement in actual economic activity.
Growth in export figures and construction activity registered in the first quarter of this fiscal is unlikely to be sustained in the coming quarters.
Moreover, a sharp increase in equity market turnover on election related optimism is also unlikely to be replicated.
“We have yet to see clear signs of a cyclical recovery.
While expectations of an improvement in investment and consumption demand remain intact, there is little evidence of this on the ground,” the report said.
“We do expect a rebound in actual economic activity, as indicated by improvements in consumer and business confidence surveys and ongoing policy changes,” it added.