India advance estimate of FY2020 GDP expected at 5%

India advance estimate of FY2020 GDP expected at 5%

Indian Economic Update

• The Government estimates have pegged Gross Domestic Product (GDP) growth at 5.0% YoY for FY2020, expected to moderate sharply from the 6.8% YoY seen in FY2019, and in line with market expectations. A deceleration in consumption, investment and a decline in exports is expected to weigh on headline growth for this year.
• Private consumption growth is expected to moderate to 5.8%. Gross fixed capital formation is expected to be anaemic at 1% YoY this fiscal. Exports are expected to show a minor contraction.
• Gross Value Added (GVA) growth is also seen moderating to 4.9% YoY in FY2020 from 6.6% YoY in FY2019.
• Core GVA growth (non-agriculture non-government spending growth) is expected to plunge to 4.6% YoY in FY2020 from a robust 7.0% last year, showing that much of the impetus to growth is being sustained by the Government’s expenditure push.
• Industry growth is expected to take a sharp hit, decelerating to 2.5% YoY from 6.9% YoY in FY2019.
• Services sector of the Indian economy is expected to lose some traction sequentially this fiscal, as slow consumption, a tedious financial sector clean up, and low offtake in real estate are expected to outweigh robust Government spending.

Global Update

• The killing of a top Iranian military general in a US air strike led the Iranian government to retaliate as it launched a dozen military missiles targeting two US-Iraqi bases this week.
• The U.S. House of Representatives voted Thursday to limit President Mr Donald Trump’s authority to strike Iran, in a mostly symbolic move. The resolution was adopted on a 224-194 vote.
• U.S. President Mr Donald Trump on Thursday said his administration will start negotiating the Phase 2 U.S.-China trade agreement soon but that he might wait to complete any agreement until after November’s U.S. Presidential Election.
• China's finance ministry will allow local governments to front-load more than CNY 500 billion worth of general purpose bond issuance intended to be used up before March, according to the sources.
• Moodys has warned that growth slowdown might be exacerbated in 2020 by US-China trade tensions, despite phase one trade deal and has forecast GDP growth of 4.0% in 2019-2021 on average across Asia-Pacific.