GDP numbers: Will the RBI cut rates next week? Here's what HSBC thinks

HSBC believes that the GDP growth will remain flat at 7.1% in FY18

India's GDP release threw up three key messages. First, the 4Q GVA and GDP estimates were much weaker than expected. The chief statistician attributed it partly to base effects (4Q FY16 was revised up significantly) and higher WPI inflation (used to derive real estimates from nominal data). WPI inflation is likely to inch lower over the next quarter (by over 1ppt) and could lead to some improvement in GDP growth numbers.

Second, growth has been slowing since the middle of 2016, and that continued into the January to March 2017 quarter. Other coincident indicators have been giving a similar message.