Will Q3FY20 GDP numbers surprise on Friday? Here’s what analysts expect

As the Central Statistics Office (CSO) gets ready to announce the gross domestic product (GDP) numbers for the third quarter ended December 2019 (Q3FY20) on Friday, most experts peg the number closer to 5 per cent. This is despite the slew of measures announced by the government over the past few months to help revive growth.

Analysts at Nomura, for instance, had expected the GDP growth to slow further to 4.3 per cent in Q4 2019 from 4.5 per cent in Q3, and predicted a below-trend growth of 5.7 per cent in FY21 from 4.7 per cent in FY20.

Meanwhile, the Reserve Bank of India (RBI) had projected the GDP growth forecast for the financial year 2020-21 (FY21) at 6 per cent and in the range of 5.5-6.0 per cent in the first half of the next fiscal and 6.2 per cent in Q3 (October-December period). GDP growth for FY 2019-20 is seen at 5.0 per cent, as per the central banks’ monetary policy review in February.

Here is how leading experts expect the growth to pan out in Q3FY20:


After slowing for six consecutive quarters, we expect economic growth to have improved in Q4 2019. We see healthy crop production despite this year’s excessive monsoon, a fading away of weather disruptions in mining and allied sectors, and some support from the corporate tax cuts as the key drivers of the growth revival. While private consumption remains subdued, government spending is providing support to the economy. The narrowing of the trade deficit is also a net positive at the margin. Overall, despite the output gap being negative, we expect economic growth to come in at 5 per cent for Q4 2019, slightly above the RBI’s estimate of 4.9 per cent.


We expect GDP growth to remain lacklustre in the near term, forecasting it to dip further to 4.3 per cent y-o-y in Q4 vs 4.5 per cent in Q3 (Consensus: 4.7 per cent). In FY21, we expect GDP growth of 5.7 per cent y-o-y, below the RBI’s forecast of 6 per cent. A key downside risk in the near term, both on the supply and the demand side, is the adverse impact from the coronavirus (COVID-19) outbreak.

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Despite the number of measures by the Government and the RBI, the leading indicators available till the quarter ended December, 2019 are not particularly robust and given the recent outbreak of coronavirus across some geography the impact could also be on some sectors in the country. We have projected GVA growth at 4.3 per cent and GDP growth of 4.5 per cent for Q3-FY20, which is lower than 6.6 per cent GDP growth recorded in the corresponding period a year ago.

Economic Research Department, State Bank of India

Our composite leading indicator (index of 33 major leading indicators) suggests that GDP growth will remain flat at 4.5 per cent as in Q3 of FY20. Our 33 high frequency leading indicators reveal an acceleration rate which was 65 per cent in Q1 FY19 has declined sharply to 22 per cent in Q3 FY20. We expect the gap between GVA and GDP to widen further in FY20 as the transfer of Government payments is witnessing a slowdown in Q4FY20.

Interestingly, with the FY19 GDP growth being revised downwards steeply to 6.1 per cent in FY19, it indicates that the growth slowdown was much more significantly entrenched and had started from April 17 onwards / FY18 after reaching a peak of 8.3 per cent in FY17 and only worsened in FY19 (post the ILF&S crisis). In FY20, it has reached its nadir with growth projected at 5 per cent by CSO (with a downward bias).