Expect Q1 GDP at 4.8%, Agri may see some spark: HSBC

India will continue to face economic slowdown in the coming months with gross domestic product refusing to show signs of any pick-up. Leif Eskesen, chief economist -India & Asean, HSBC forecasts FY14 first quarter GDP growth at 4.8 percent with significant downside risk. Most of the street is also expecting growth to stagnate at around the 4.8 percent mark.

Speaking to CNBC-TV18, Eskesen painted a slightly better picture for the agriculture sector, what with expectation of good harvest after an impressive monsoon. But the chief economist of HSBC suggested that most other sectors will disappoint in Q1. The softening of manufacturing and services sector will continue in the coming quarters leading to a lot of hardship, he said. For the full year (FY14), he expects the GDP at 5.5 percent.
Eskesen pointed that a slow domestic consumption on the demand side and near dead investments will adversely impact growth. Due to China problems, India will be in an advantageous position to boost exports, but that sector alone cannot drive growth, he said.
Speaking about the coming monetary policy, Eskesen believes the apex bank most likely will continue with its existing policy of liquidity tightening. Given that inflation is quite high and Indian rupee is terrible weak, he believes that the RBI should go ahead with conventional monetary policy measures, including repo rate hikes, even if they impact growth. "Going back to a growth level of 8 percent will take four year," he concluded.