Q2 GDP data due today; sub-5% growth likely

According to economists and research houses, GDP is likely to have grown between 4.4-4.8%

The Gross Domestic Product (GDP) is likely to have grown sub-5% for the fourth straight quarter in the July-September of the current financial year, prolonging the wait for economic recovery.   

The Q2 GDP data will be released in the evening today.

The GDP is likely to grow in the range of 4.4-4.8%, according to projections made by various independent economists and research firms.

According to a Reuters poll of 40 economists, the economy grew 4.6% in the July-September period this financial year.

It was on the back of improved manufacturing activity and good monsoon in this quarter that the economy may have grown better than a four-year low of 4.4% in the previous quarter. But, it would be the slowest second quarter growth in four years. The economy grew 5.2% in the second quarter of 2012-13.

It would also raise questions on more than 5% growth in the current financial year, which the finance ministry has claimed.

Moody’s Analytics pegged GDP growth in the second quarter of 2013-14 at 4.5%. The research wing of Moody’s Group said, “GDP growth in the second quarter cooled to its slowest pace in four years, as production slowed across most parts of the economy.”

A Dun & Bradstreet report said that it expects the economy to rise by 4.5% in the September quarter this year.

“The manufacturing sector fails to revive, fiscal deficit continues to rise and the domestic private sector consumption continues to weaken,” the firm said.

ICRA Ratings said that the Indian economy likely expanded 4.6% in the second quarter.

"GDP growth would have improved to 4.6% in Q2 from 4.4% in Q1, with a pick-up in the performance of industry at around 2.3% from 0.2% and agriculture at near 3.5% from 2.7%," ICRA said.

Siddharth Shankar, Director at Sinia Global said that the quarter saw improvement in the manufacturing and the agricultural sector while not in the services sector. "The services sector may be the spoiler and may pull down the GDP. I expect the GDP numbers for the second quarter to be between 4.25% and 4.75% with higher probability of it being 4.25%”, said Shankar.

Zyfin, a research and analytical firm, pegged the GDP growth at 4.7% with the services sector being the worst performer. According to Zyfin, the sector grew at a five-year low of 5% in the April-September period.

In the previous quarter, according to official estimates, the services sector growth slowed to 6.2% and Zyfin had estimated 5.6% expansion in the sector.

However, all projections are not as pessimistic. Assocham predicted that the rise in GDP was 5.4% for the second quarter of 2013-14 due to improved agricultural output.

"Growth would touch 5.4% in the second quarter owing to a good monsoon and resultant better performance of farm sector, thereby propelling the industry and services performance in the current fiscal," Assocham said.

It pegged the farm sector sector growth at 4.25% in quarter ended September this year.

Deutsche Bank pegged economic growth at 5.5% for the quarter.

The government expects the economy to steer back in the second half of this year. The Prime Minister's Economic Advisory Council (PMEAC) has estimated the GDP to grow 5.3% for 2013-14, which experts feel is unlikely to be achieved.