In the current fiscal year (2020-21, or FY21), analysts began revising upwards their forecasts for India’s economic output after gross domestic production (GDP) lowered market expectations in the second quarter (Q2) of FY21 by posting a modest contraction of 7.5%.
In the first quarter of FY21, GDP declined 23.9 percent. Although FY21 will still see a downturn in the economy, it is likely to be less pronounced than experts had expected earlier.
QuantEco Research projects that GDP will decline by 8.3 per cent over the fiscal year as a whole, compared to its previous estimate of a 9.5 per cent decline. Its founder, Shubhada Rao, says that if sequential recovery in Q2 is a mixture of pent-up and organic demand, the high frequency indicators will be validated.
There are concerns that real estate will decline, with financial services likely to decline throughout the current quarter. Along with government spending, the turnaround in the service sector needs to be closely monitored.
In the July-September portion, most of the high frequency indicators staged a rebound. From the last quarter, the decrease in core sector production was shallower, with Sept output at -0.8 percent . JP Morgan’s Sajjid Chinoy claims that contraction should be shallower than previously feared and predicts that GDP contraction in Q2 will be closer to 8 percent.
This in turn, is likely to cause a series of gross domestic product changes for the full year. India is recovering faster and earlier than previously expected, with GDP figures likely to improve India as a rising market. It can only be predicted that stock markets have been on a tear & growth upgrades to boost more buoyancy, he added.
What is GDP?
The total monetary value of all finished goods and services that are produced within the boundaries of a country over a particular period of time is the gross domestic product (GDP). It acts as a detailed scorecard of the economic health of a given country as a broad measure of overall domestic output.
While GDP is generally calculated on an annual basis, sometimes it is also calculated on a quarterly basis.
In the U.S., for instance, for each fiscal quarter and even for the calendar year the government publishes an annualized GDP estimate. The individual sets of data used in this report are presented in real terms so that the data is balanced for market fluctuations and is therefore inflation-net. The Bureau of Economic Analysis (BEA) estimates the GDP in the United States using data calculated by surveys of consumers, suppliers, and builders and by looking at trade flows.
