Home / International/ ANZ slashes forecast for India’s GDP growth in 2019/20 to 6.2%

ANZ slashes forecast for India’s GDP growth in 2019/20 to 6.2%

Comments / {{hitsCtrl.values.hits}} Views / Monday, 19 August 2019 00:01


Workers make pipes used for drilling, at a factory in an industrial area in Mumbai, 29 January 2018 – Reuters


NEW DELHI (Reuters): The Australia and New Zealand Banking Group (ANZ) slashed its forecast for India’s economic growth to 6.2% in the financial year ending next March from a previous estimate of 6.5%, warning it would be tough for authorities to engineer a turnaround.

The bank’s estimate of gross domestic product (GDP) growth is now well below the expectations of other banks, and a long way from the Reserve Bank of India’s (RBI) forecast of 6.9% forecast, which itself was cut from 7% this month.

The forecasts all badly lag the Government’s longer-term target of getting the economy humming at rates above 8%.

India’s quarterly GDP growth slowed to a five-year low of 5.8% in January-March as a result of sluggish domestic and global demand and little growth in private investment. Finance Minister Nirmala Sitharaman last week held several meetings with industry leaders, who have called for stimulus measures, including tax rebates, to support consumer demand and private investment.

In a sign of how much demand has been hit, industry figures released this week showed that sales of passenger vehicles to car dealers plunged 30.9% in July from a year earlier, the ninth straight month of declines and the biggest drop since December 2000.

“It is difficult to see a turnaround in the foreseeable future as the economy is beset by multiple constraints,” ANZ said in its note which also downgraded its forecast for the year to March 2021 to 6.5% from 7.1%.

It said sales of cars and consumer durables, as well as passenger air traffic, have shown declining trends, along with investment indicators, such as steel and cement production. It also said exports were weakening because of what it called an overvalued rupee currency.

Sanjay Mathur, chief economist for Southeast Asia and India at ANZ, said the RBI, the nation’s Central Bank, has been unable to get commercial banks to cut interest rates enough to provide much economic stimulus.

The RBI has cut its benchmark repo rate by 110 basis points this year, but major banks have only cut their rates by 40 basis points on average. This is because they are keen to protect margins as they work through high levels of bad loans, estimated at nearly $ 150 billion.

“The fiscal and monetary stimulus will help revive economic growth but it may take a much longer period to boost growth, as there is a time lag between the policy measures and response,” Mathur said.

Separately, credit rating agency Fitch projected a growth forecast of 6.8% for the current fiscal year, but said the RBI’s rate cuts were insufficient for “lifting the Indian economy”.

Share This Article

Facebook Twitter


1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.


Today's Columnists

Economy, business community and the Prime Minister

Friday, 20 September 2019

The speech made by Prime Minister Ranil Wickremesinghe as the Chief Guest of the Sri Lanka Economic Summit 2019 deserves very careful consideration by the country due to several reasons. This will no doubt be his last speech on economic policy to be

Sri Lanka needs to invest more on soft infrastructure

Friday, 20 September 2019

Developing countries like Sri Lanka will have to prepare for further downside risks in 2020 with the growing debt problems and the growth problems in Europe and the slowdown in Asia. Slower growth is already visible in weakening global trade and comm

Origins, rise and irrelevance of SLMC

Friday, 20 September 2019

Andreas Johansson’s ‘Pragmatic Muslim Politics: The Case of Sri Lanka Muslim Congress,’ Switzerland: Springer, 2019, is the latest piece of academic research on SLMC, based on Parliamentary Hansards, official party documents and information rec

Questions about Speaker’s candidacy for the presidency?

Friday, 20 September 2019

It is rather unfortunate that Mr. Karu Jayasuriya has issued a statement (17 September), as the Speaker, ‘that he is willing and ready to contest the Presidential Election, on the request of some organisations and individuals, including Maha Sangha

Columnists More