On February 28, the National Statistical Office (NSO) launched GDP numbers for the quarter finishing December 2022. While research of GDP statistics is generally a simple workout, the newest unencumber incorporated revisions to previous GDP statistics consistent with NSO’s revision calendar. Because important adjustments were made to previous GDP statistics, there’s some quantity of misunderstanding as to learn how to learn the newest numbers. Here are 3 charts that check out to respond to this query.
The headline GDP numbers display a broad-based slowdown …
GDP enlargement within the quarter finishing December 2022 stood at 4.4%. A comparability of enlargement charges for primary elements of GDP presentations that the economic system has been dropping momentum within the present fiscal yr around the board. The maximum alarming slowdown is obvious in personal ultimate intake expenditure (PFCE) which has a percentage of 60% in overall GDP within the December 2022 quarter.
“The weakness in private consumption stood out, not just slowing on a yoy basis (2.1% yoy versus 8.8% last quarter), but also on the basis of our preferred metric (14.8% growth between December 2019 and 2022, compared to 15.2% growth between September 2019 and 2022)”, HSBC economists Pranjul Bhandari and Aayushi Chaudhary stated in a notice.
While capital formation continues to be appearing spectacular enlargement price, a slowdown can also be observed even there. Slowing exports level to weakening of exterior call for for the economic system. However, a greater than proportionate slowdown in imports has mitigated enlargement headwinds from exports to a point.
See Chart 1: Major elements of GDP enlargement from June 2022 to December 2022
… however, one of the most slowdown is just because of knowledge revision.
The first response to the GDP numbers after they have been launched on February 28 used to be that they have been not up to what used to be anticipated. A Bloomberg ballot of economists had put this quantity at 4.7%. However, there’s some benefit within the argument that one of the most divergence within the anticipated and exact GDP enlargement quantity is for the reason that previous quantity has modified. For instance, if one have been to calculate GDP enlargement at the foundation of December 2021 quarter numbers to be had earlier than February 28, headline GDP enlargement in December 2022 quarter will come to five.1% reasonably than 4.4%. To be certain that, the issue is intrinsic to the best way wherein the NSO releases its knowledge, as revised GDP estimates from the previous power a metamorphosis of base for enlargement calculations.
“When one set of data is revised to take into account underlying data revisions, larger samples, etc., and the other is not, it is not a like-for-like comparison”, Chief Economic Advisor V. Anantha Nageswaran stated in a notice circulated to newshounds.
See Chart 2: December 2022 GDP enlargement the use of December 2021 GDP knowledge earlier than and after February 28 revision
Manufacturing stays a space of fear even with this caveat
Gross Value Added (GVA) in production reduced in size by means of 1.1% within the quarter finishing December 2022. This is the 3rd contraction in production in 2022, one thing that hasn’t ever took place within the present GDP sequence. While, a part of the producing efficiency can also be attributed to the revision of historic numbers, professionals imagine that production remains to be a space of fear.
“Both YoY growth and sequential growth reflect a similar story of continued weakness in manufacturing activity and strong momentum in construction activity. Overall, in the first three quarters of FY23, Real GVA manufacturing growth is a mere 0.4%YY vs 10%YY growth in Real GVA construction. This is consistent with the trend in employment data, where construction jobs are well ahead of pre-Covid levels, but manufacturing jobs momentum is more subdued”, Samiran Chakraborty, Chief India economist at Citibank stated in a notice.
See Chart 3: Manufacturing GVA enlargement
Which method for the economic system now?
NSO’s assumption of 2022-23 GDP rising by means of 7% implies a GDP enlargement of five.1% within the March 2023 quarter. In its solution dated February 8, RBI’s Monetary Policy Committee projected quarterly enlargement charges of seven.8%, 6.2%, 6% and 5.8% within the 4 quarters starting June 2023, which means an annual GDP enlargement of 6.4% in 2023-24.
Private sector analysts, have a extra sober review. “We believe that overall growth momentum is softening, as pent-up demand from the lockdown period fades, exports weaken, and tighter fiscal and monetary policy rates take their toll. We expect GDP growth to slow from 6.8% in FY23 to 5.5% in FY24”, Bhandari and Chaudhary added.
“We believe India’s growth cycle has peaked, and a combination of weaker global growth and tight domestic and global financial conditions could further impair the growth drivers viz. exports, investment and discretionary consumption. We forecast GDP growth to moderate from 6.7% yoy expected in FY23 to 5.3% in FY24”, Nomura economists Sonal Varma and Aurodeep Nandi stated in a notice.