Economic Green Shoots likely in Q2
Manufacturing, air travel, freight and corporate earnings point to a pickup: SBI
Mumbai: India’s economic growth rate may recover in the second quarter of this financial year from a three-year low in the first quarter. Indicators such as manufacturing indices, international air passenger and freight traffic and corporate earnings point to a pick-up in GDP growth, which could exceed 6% during the three months ended September, SBI said in a report. Annual growth could be over 7%, it said.
“We strongly believe that second quarter growth is likely to trend higher and might be in the lower end of 6-6.5% band with an upward bias,” SBI Research said in the report on Monday. The economy expanded 5.7% in the quarter ended June on the back of the impact of the note ban in November last year and teething troubles ahead of the goods and services tax regime, which was implemented from July 1.
The country’s largest bank based its optimism on several positive indicators. SBI’s Composite Index, which indicates possible output trends, was buoyant for September and October due to a revival in the automobile industry. Industrial output growth may be higher than 5%, while mining & electricity growth is expected to be significantly better.