India's economy might gain some momentum in 2020 given greenshoots popping up here and there, but it would struggle to achieve 5 percent gross domestic product (GDP) growth, according to Jahangir Aziz, head of emerging markets economic research at JPMorgan .
Aziz told CNBC-TV18 that things were not looking very good on the growth front and hopefully next year GDP will be slightly higher at about 5.5 percent.
“We might get some improvement at least on a seasonally adjusted momentum basis, but that is very difficult to do with the kind of quality of data that we have. So we might get some momentum increase given some greenshoots popping up here and there. However, nothing to write home about and this year we will probably struggle to get 5 percent gross domestic product (GDP) and hopefully next year will be slightly higher to may be around 5.5 percent. Things are not looking very good on the growth front,” he said.
He added: “More or less activity data everywhere else is looking terrible particularly on the manufacturing side and there is a concern that this is already spread into consumer, but if you look at forward survey data, all of them point to a reasonable pick up taking place starting from Q2 of 2020 and then going into the rest of 2020. So, our sense is that you are probably going to see a much better turnout through the course of 2020 than at present."
Speaking on Reserve Bank of India’s (RBI) Operation Twist, Aziz said: “The 10-year sold-off because the RBI went against market views and did not cut (rates). Now, the RBI is trying to make up for that increase in 10-year rates by doing this thing called Operation Twist. You usually do Operation Twist or other countries have done Operation Twist when you do not have any more space left in standard interest rate policy.”
Aziz said that the headline numbers were going to be terrible. Food inflation has picked up, food inflation most likely would keep picking up untill February, he added.