Expect full year GDP at around 4.7%: StanChart

Samiran Chakrabarty, head - Research, Standard Chartered Bank, says Q1 Gross Domestic Product was more or less in line with expectations. However, the 3.9 percent growth in trade, hotels, transport, communication, which is a proxy of consumption implies that consumption has got significantly impacted, he adds.

StanChart is expecting the full year GDP at around 4.7 percent. Also read: Expect GDP growth to pick up in coming quarters: Rangarajan
Gross Domestic Product or GDP for the first quarter of this fiscal year came in at a four-year low of 4.4 percent versus 5.4 percent (YoY), below street expectation of 4.7 percent. In the previous quarter, the GDP witnessed a 4.8 percent growth.
Agricultural growth, on which economists had pinned a lot of hope, came in at 2.7 percent (vs 1.4 percent) and industrial growth recorded a dismal 0.2 percent growth against an 1.8 percent in the same quarter previous year. Below is the verbatim transcript of his interview on CNBC-TV18 Q: Your first thoughts- will this be the bottom at all?
A: 4.4 percent is not too much of what we were expecting at 4.6 percent. However, the number that is really surprising is the 3.9 percent growth in trade, hotels, transport, communication because this is a proxy of consumption. The very low growth rate implies that consumption has got significantly impacted. Whereas the 9.4 percent growth in the public spending is creating an impression that probably the fiscal side has not started of the year too well.
I think these two will be the talking points of this gross domestic product (GDP) trend otherwise rest of it is more or less in line with what we or the market was expecting. Q: Private final consumption expenditure coming at just 1.6 percent higher - Rs 8.5 lakh crore, is that a shocker or was it largely expected?
A: This is what I was saying that this number correlates well with the trade, hotels, transport, communication and if one looks at this 3.9 percent print on that this is the lowest that I can think of except for a brief period in the global financial crisis time. I can’t remember a 3.9 percent print. These numbers are clearly tell you that the consumer side of the economy also has got impacted, it is just not investment slow down story any more. at 4.4 percent for the first quarter of this fiscal year was more or less in line with expectations. However he adds, the 3.9 percent growth in trade, hotels, transport, communication, which is a proxy of consumption implies that consumption has got significantly impacted. Q: Where are we in the troughing zone?
A: It is a possibility because as you rightly said this was a quarter when there was lot of pain, lot of uncertainty that could have affected activity levels in the economy.
What we are anticipating is a 4.7 percent growth for the full year and to have that the second half should look marginally better maybe just a tad below the 5 percent mark. For that to happen we are banking on three things. One is that the lagged-effect of the monsoon when the crops will be sold in the market that time one will see some consumption spend in the rural economy. Two, we are also banking that in second half global growth will be somewhat better making your exports look better. Three, some election related spending should provide support to consumption. If these three things work well for us then possibly we will end up something like a 4.7 percent average for the full year. Q: What is your current number – we are already at 4.7 percent right that was your report yesterday?
A: That is right. Q: Now after looking at this 4.4 percent can you give me some idea of where you stand for second quarter itself – did you factor in something lower than 4.4 percent when you counted 4.7 percent?
A: Our trajectory was actually a lower one in September compared to the June quarter, so we had looked for a 4.6 percent in the June quarter and a 4.5 percent for the September quarter. 4.6 percent has become 4.4 percent so technically September quarter could be a tad lower than 4.4 percent.