Tag: growth forecast

ADB lowers India’s economic growth forecast for FY22 to 10%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Asian Development Bank has downgraded India’s economic growth forecast for the current financial year to 10 percent on Tuesday, from 11 percent projected in April, on account of the adverse impact of the coronavirus pandemic. India’s GDP growth recovered to 1.6 percent in the last quarter of the fiscal year ended March 2021, narrowing contraction in the whole fiscal year from 8 percent estimated in April to a revised 7.3 percent, the multilateral funding agency said in the Asian Development Outlook (ADO) Supplement.

“Then a second wave of the pandemic induced many state governments to impose strict containment measures. New COVID-19 cases daily peaked at more than 4,00,000 in early May, then fell to a little over 40,000 in early July. “Early indicators show economic activity resuming quickly after containment measures eased. The growth projection for FY2021 (ending March 2022), downgraded from 11 percent in ADO 2021 to 10 percent, reflects large base effects,” it said.

The ADO was released in April. The projection for FY2022 (ending in March 2023), by which time much of India’s population is expected to be vaccinated, is upgraded from 7 percent to 7.5 percent as economic activity normalises, said the Manila-headquartered funding agency.

With regard to China, the ADB supplement said the expansion in the People’s Republic of China is still projected at 8.1 percent in 2021, and 5.5 percent in 2022, as favorable domestic and external trends align with April forecasts. On South Asia, ADB said the economic outlook for the subregion is dampened by new waves of COVID-19 hitting the subregion from March to June 2021.

The adverse economic impact of these new waves is expected to be limited, with businesses and consumers better able to adapt to the pandemic and containment measures now than they were a year ago, it said. “The GDP growth forecast for the subregion in 2021 is downgraded from 9.5 percent in ADO 2021 to 8.9 percent but upgraded for 2022, from 6.6 percent to 7 percent,” ADB said in the supplement.

Recovery is under way in developing Asia, but with the growth projection for this year revised down slightly from 7.3 percent in the Asian Development Outlook 2021 in April, to 7.2 percent following renewed virus outbreaks in some economies. The projection (developing Asia) for 2022 is upgraded from 5.3 percent to 5.4 percent, it added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ind Ra revises down India’s FY22 GDP growth forecast to 10.1%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India Ratings and Research on Friday revised down India’s FY22 real GDP growth forecast to 10.1 percent, from an earlier projection of 10.4 percent, citing the second wave of COVID-19 infections and slower pace of vaccination. At a time when large parts of the country are experiencing tremendous pressure on medical infrastructure, the agency said it expects the second wave to start subsiding by mid-May.

Earlier this month, the Reserve Bank maintained its 10.5 percent GDP growth estimate, but Governor Shaktikanta Das has flagged the rising cases as the biggest impediment to recovery. Other brokerages and analysts have also been revising down their forecasts in light of the second wave.

The economy is estimated to have contracted by 7.6 percent in FY21. India Ratings said the impact of the second wave will not be as disruptive as the first one, despite the daily caseload touching three times of the first wave’s peak, as lockdowns are set to be localised ones.

”Unlike the first wave, the administrative response is not abrupt and is unfolding gradually in a graded manner. ”Also, households, businesses and other economic agents are better prepared and there is a significant amount of learning by doing, which can help them withstand and navigate through the second wave of COVID-19 crisis,” the rating agency added.

Additionally, the vaccine will also enhance safety and reduce the fear element among the vaccinated economic agents, it said. Over 132 million vaccine doses have been administered as of April 21, the agency said, estimating that 1,768 million doses will be required, after the government announced that the jabs will be open for all adults from May 1.

The vaccination efforts will cost 0.12 percent of the GDP to the union government and 0.24 percent to the state governments, it said, adding that both vaccination production and the pace of vaccination are key in controlling the rising caseload and for economic growth. ”Ind-Ra has, therefore, revised its GDP growth forecast for FY22 to 10.1 percent from earlier forecasted 10.4 percent,” it said.

The demand-side component of GDP namely private final consumption expenditure, government final consumption expenditure and gross fixed capital formation are now expected to grow at 11.8 percent, 11.0 percent and 9.2 percent, respectively, in FY22, as against the earlier forecast of 11.2 percent, 11.3 percent and 9.4 percent, respectively, it said. Rural demand is likely to remain resilient in view of good Rabi harvest and the prospects of a near-normal monsoon forecast for 2021 by the India Meteorological Department, it said.

Although urban demand is still recovering and may get adversely impacted by the second wave of COVID-19 infections, the demand from contact-intensive sectors is likely to strengthen due to the ongoing vaccination drive, it said. The agency, however, said that more than growth, it is inflation where ”worrying signs” are emerging, and noted that higher inflation not accompanied by a commensurate increase in wage growth could mean lower disposable income/consumption demand, which in turn could adversely impact the private corporate investment revival in the economy.

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It expects retail and wholesale inflation to average 5.0 percent and 5.9 percent, respectively, in FY22. The fiscal deficit target of 6.8 percent is achievable, but hinges on the successes on divestment, the rating agency said.

After a surplus in FY21, the current account is expected to slip back into deficit in FY22, and the gap was estimated at 0.4 percent by the agency.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

S&P cuts India GDP growth forecast for FY21 to 5.2%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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S&P Global Ratings on Monday cut its estimate for India’s GDP growth in the fiscal starting April 1 to 5.2 percent from its earlier estimate of 6.5 percent, as it saw the outbreak of coronavirus costing economies around the globe.

It put “the total and permanent income loss for Asia-Pacific from COVID-19 at approximately USD 620 billion.”

“This loss will be distributed across sovereign, bank, corporate and household balance sheets,” it said but did not give country-wise break up its estimated loss.

S&P said it has revised estimates for real GDP, inflation and policy interest rates for Asia-Pacific nations.

For India, it estimated a 5.2 percent growth in 2020-21 (April 2020 to March 2021), down from the previous estimate of 6.5 percent. In the following year, it projects a 6.9 percent growth, down from 7 percent earlier for 2021-22.

For the current fiscal which ends on March 31, it put the real GDP estimate at 5 percent.

It estimated a 7 percent growth in 2022-23 and 2023-24 fiscal years.

The inflation rate was seen moderating to 4.4 percent in the next fiscal from 4.7 percent in the current. It would further drop to 4.2 percent in 2021-22 but rise to 4.4 percent in the following financial year and then to 4.5 percent in the year thereafter.

Key policy interest rates are projected to fall to 4.25 percent in 2020-21 from current 5.15 percent but would rise to 4.5 percent in the 2021-21 financial year.

“S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak in June or August, and we are using this assumption in assessing the economic and credit implications,” it said.

The rating agency said the measures to contain COVID-19 have pushed the global economy into recession and could cause a surge of defaults among nonfinancial corporate borrowers.

S&P said a recession across Asia-Pacific is now guaranteed due to a deep first-quarter shock in China and the shutdown of activities across G7 economies.

“S&P Global Ratings believe this, together with a loss of household and business confidence in these economies, will translate into severe and more persistent supply and demand shocks across the region. Unemployment rates will rise.”

Domestic demand will be hit almost everywhere by restrictions on movement and risk aversion. “External spillovers will be felt through four channels – people flows — travel, tourism, and education; trade-demand for the region’s exports; supply chains–disruptions to production; and commodity prices.”

Standard and Poor’s (S&P) joins a chorus of international agencies that have made a similar cut in growth estimates in recent days.

Fitch Ratings had on Friday slashed its growth forecast for India from 5.6 percent to 5.1 percent for 2020-21.

Moody’s Investors Service last week lowered India’s GDP growth forecast for the 2020 calendar year to 5.3 percent from 5.4 percent it had projected earlier.

The Organisation for Economic Cooperation and Development (OECD) has cut its 2020 growth projections for India to 5.1 percent.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Walmart shares drop as Flipkart deal prompts cut in earnings forecast, says report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Walmart Inc lowered its earnings forecast for the year on Tuesday to include the impact from its acquisition of Indian e-commerce company Flipkart, and said its e-commerce growth next year will be slower than the current fiscal year.

In May, Walmart acquired Flipkart for $16 billion, its largest-ever deal, in order to compete with Amazon.com Inc in an important growth market.

The retailer now expects to earn between $4.65 and $4.80 per share for fiscal 2019 from an earlier forecast of $4.90 and $5.05 per share.

Shares were down 2.5 percent at $91.5 in premarket trading.

Walmart also expects a lower growth rate of 35 percent for its online business in fiscal year 2020. Earlier this year, it said U.S. online sales were on track to surge 40 percent for the current year.

In August, Walmart posted its best quarterly U.S. sales growth in a decade and raised its full-year sales and profit outlooks, showing it could hold its own against Amazon.

The company has benefited from lower unemployment and tax cuts that have put more money in U.S. consumers’ pockets this year.

For fiscal 2020, Walmart expects comparable sales growth of 2.5 percent to 3 percent and expects earnings to decline by a low-single-digit percentage compared to fiscal 2019 on account of Flipkart.

The retailer will address investors at its Bentonville, Arkansas headquarters starting at 9:00 a.m.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

France lowers its growth forecast for 2019 to 1.7 percent

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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France’s prime minister says the government has lowered its economic growth forecast for next year and unveiled plans to cut public spending.

In an interview Sunday with Le Journal du Dimanche, Prime Minister Edouard Philippe said the government will base its 2019 budget on an estimated growth of 1.7 percent, down from 1.9 percent previously expected.

He said France is still committed to be in line with European Union rules regarding public deficits.

Philippe explained some measures included in the 2019 budget, which is to be formally presented at the end of September. He said pensions and family and housing benefits will not be pegged to inflation anymore —meaning they will increase at a more moderate pace.

The French government will also cut 4,500 public service jobs next year.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow