India’s underlying growth momentum turns sombre

December 1, 2018

NEW DELHI - At 7.1% y/y, India's Q2 FY19 GDP growth (quarter ending September 30) has undershot market expectations. Net exports were a significant drag and private consumption also slowed, but  investment demand remained buoyant, presumably reflecting strong public capex spending, according to a research note from ANZ Bank.

However, underlying growth momentum has turned sombre. ANZ says its  GDP forecast of 7.2% for FY19 now faces downside risks.

ANZ says that on the production side, gross value added (GVA) based growth plummeted to 6.9% y/y. This was driven by a moderation in manufacturing and agriculture output.

"Recovery in the services sector also remained uninspiring as the improvement in public services was offset by soft momentum in financial services." (ATI.