The GDP growth for the fourth quarter of the previous fiscal year (2021-22) will be out today and if the estimates are to be believed, the economy slowed on the back of Omicron variant and rise in commodity prices.
India‘s economy likely slowed in the fourth quarter and is expected to grow between 3.5-5.5%, economists predict.
The fourth quarter economic growth is likely to see a dip due to the impact of localised restrictions during the Omicron wave and higher commodity prices due to the Russia-Ukraine war that impacted the margins of firms.
Early and excessive heatwaves have affected the production of rabi crops which could bring down the GDP growth rate somewhere near 5.5%, said Madan Sabnavis, chief economist, Bank of Baroda.
ICRA and HDFC Bank estimated the growth rate for FY22 at 8.9%. ICRA’s chief economist Aditi Nayar suggested that the services sector might grow at 5.4% due to increased demands witnessed this year. However, the agriculture and industry segments might suffer a dip this time.
Higher input costs and supply side pressures could slow down the growth rate. Barclays’ chief India economist, Rahul Bajoria, said, “We forecast India’s economic growth slowed to 3.7% year-on-year”.
Mobility restrictions due to Omicron fears might affect the GDP numbers for the quarter. Radhika Rao, executive director and senior economist, DBS Group Research, predicted the number to land somewhere near 3.7% for the fourth quarter of FY22.
“Growth likely hit a road bump in the final quarter of FY22 on a high base as well as onset of the Omicron variant which had necessitated temporary localised mobility restrictions,” said Radhika Rao, executive director and senior economist, DBS Group Research, pencilling in 3.7% growth for the quarter.
A Reuters poll suggested that the upcoming GDP numbers might stumble because of increased inflationary pressures along with the ongoing Pandemic concerns.
The estimated average growth for 2021-22 stood at 8.7% as suggested by a Reuters poll last month.