GDP Growth
RBI staff predicts bleak Jan-Mar, see GDP growth at 6.5% vs forecast of 7.2%
This story was originally published at 19:41 IST on 24 December 2024
Register to read our real-time news.Informist, Tuesday, Dec. 24, 2024
--RBI paper: Oct-Dec data shows econ reviving from Jul-Sept momentum slowdown
--CONTEXT: Comments from RBI's monthly State of the Economy article
--RBI paper: Internal dynamic model pegs FY26 CPI inflation at 3.8%
--RBI paper: Internal dynamic model pegs FY26 GDP growth at 6.7%
--RBI paper: Internal 'nowcast' model pegs Oct-Dec GDP growth at 6.8%
NEW DELHI – The Reserve Bank of India's internal models have predicted a grim fourth quarter for the Indian economy, with its staff predicting that growth may only be 6.5% in Jan-Mar, well below the central bank's official forecast of 7.2%.
"As per the projections based on the in-house Dynamic Stochastic General Equilibrium, real GDP growth is likely to recover to 6.8% and 6.5% in Q3 (Oct-Dec) and Q4 (Jan-Mar) of 2024-25, respectively," the article on State of the Economy in the RBI monthly bulletin said. The article is written by the RBI staff, including Deputy Governor Michael Patra and the views expressed in the article do not reflect the central bank's official stance. In September, which was the last time the State of the Economy article had provided forecasts as per the in-house model, GDP growth in Oct-Dec was forecast at 8.4%.
Earlier this month, the RBI had lowered its growth forecasts for FY25 by 60 basis points to 6.6?ter growth in Jul-Sept unexpectedly slid to a seven-quarter low of 5.4%. The following table details the differences between the RBI's official quarterly growth forecasts and projections from the central bank staff's internal Dynamic Stochastic General Equilibrium model:
| PERIOD | RBI GROWTH FORECAST | STAFF GROWTH ESTIMATES |
| Oct-Dec | 6.8% | 6.8% |
| Jan-Mar | 7.2% | 6.5% |
| Apr-Jun | 6.9% | 7.4% |
| Jul-Sep 2025 | 7.3% | 7.3% |
| Oct-Dec 2025 | -- | 6.0% |
| Jan-Mar 2026 | -- | 6.0% |
| 2025-26 | -- | 6.7% |
Commenting on the Jul-Sept GDP data, the State of the Economy article said on Tuesday that high-frequency data for Oct-Dec suggested the Indian economy is recovering from the decline in momentum seen in Jul-Sept on account of strong festival activity and "sustained upswing" in rural demand. However, it also warned that slower nominal GDP growth is emerging as a headwind, "which could hinder fiscal spending, including on capex, to achieve budgetary deficit and debt targets".
"The time to act is now to excoriate inflation and revive investment strongly, especially as the usual winter easing of food price is setting in and the prospects of private consumption and exports accelerating are getting brighter," it said.
RBI economists' internal model also sees CPI inflation averaging just 3.8% in 2025-26, with headline retail inflation seen at 4.5% in the first quarter of the next financial year before moderating in the subsequent three quarters below the central bank's medium-term target of 4.0%. Interestingly, while the model agrees with the official RBI view that inflation will average 5.7% in the current quarter, it sees inflation easing only to 4.9% in Jan-Mar as opposed to the RBI's official projection of 4.5%. End
Reported by Siddharth Upasani
Edited by Saji George Titus
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.
To read more please subscribe
Share this Story:
