RBI staff see downside risk to GDP growth forecast of 6.3% for Q2

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Reserve Bank of India (RBI) staff see downside risk to the central bank's GDP forecast for the July-September period, with one of their models estimating a 20 basis points drop in growth at 6.1 percent.

The GDP data for the second quarter of the financial year 2022-23 will be released on November 30.

"Our economic activity index that employs a dynamic factor model with 27 high-frequency indicators nowcasts GDP growth for Q2: 2022-23 (July-September) at 6.1 percent," the monthly State of the Economy article, released on November 18, said.

The paper, published as part of the monthly bulletin, has been authored by RBI staff, including Deputy Governor Michael Patra, and does not represent the views of the RBI.

The article also said "our nowcasting and full information models peg real GDP growth in Q2 (July-September) between 6.1 and 6.3 percent".

"If this is realised, India is on course for a growth rate of about 7 percent in
2022-23."

Also read: RBI Bulletin: Inflation easing, economy resilient but sensitive to global headwinds

As per the RBI's official forecast, released on September 30 with the Monetary Policy Committee's (MPC) statement, India's GDP is seen growing 7 percent in the current financial year, with the quarterly forecasts being 6.3 percent for July-September and 4.6 percent for both October-December and January-March 2023.

The risks to the forecasts were said to be "broadly balanced".

The RBI lowered its GDP growth forecast for FY23 in September by 20 basis points after data released at the end of August showed the economy grew by 13.5 percent in April-June, well below economists' expectations of 15 percent and the RBI's own forecast of 16.2 percent.