Main drivers of growth in Q2 and Q3 likely to be domestic: Saugata Bhattacharya
Saugata Bhattacharya, Chief Economist, Axis Bank, says “manufacturing, if it actually stalls, in addition to the agricultural uncertainty, given the low rains that we have seen in August, might actually pull GDP growth even lower than the 6.2% that we have been expecting and forecasting for Q2. That is likely to pull down overall annual growth for GDP from our current estimates of 6.4% to 6.3 or 6.2%.”
Is the GDP number, in line with your expectations?
Very much in line with our expectations. We had expected 7.9%.
It is 7.8%, which is in line. We will be seeing if manufacturing is driving this relatively high growth. What is the role of net exports? Exports minus imports, then services and agriculture.
The other thing that we will be looking at very closely is the effect of the WPI inflation which is a large part of the manufacturing GDP deflator. That is the overall basket that we are looking for. But the headline number is very close to our expectations.
Let us look at two very important data that most are talking about, which is manufacturing and service. Service is around 7.9% while manufacturing has come down to 4.7%. How do you read it?
Manufacturing is a surprise, because manufacturing is something that we had expected would have been higher because of the numbers from the first quarter financials of the listed companies that is used to track the nominal growth in GVA, which is the profits and the employee services, wage costs and so that is a little bit surprising.
Given that the IIP numbers have been very strong, which is the informal set of the manufacturing numbers, the services are a little bit higher than the 6.5% we had expected.
