India: Growth downgrade – ANZ

ANZ analysts are further lowering their India’s GDP forecasts for both FY2020 and FY2021 with revised forecasts now standing at 6.2% and 6.5% compared with 6.5% and 7.1% previously.

Key Quotes

“Not only are these forecasts significantly below consensus but they also point to a prolonged period of sub-potential growth.”

“Various high frequency consumption and investment indicators have remained weak. Corporate earnings have also regularly disappointed and forward guidance remains downbeat. The difficult external environment, in combination with an over-valued rupee, continues to suppress exports.”

“In our view, it will take considerable time for growth to regain buoyancy even with a supportive monetary policy.”

“Fiscal policy has also been expansionary once off-budget spending is considered. Unfortunately, not only has it had limited success in reversing the slowing growth momentum but also cannot be stretched much further.”

“The bottom line is that India's GDP growth will fall short of its true potential in the foreseeable future, even with a supportive policy framework.”