Indian economy will continue its recovery but at a slower pace in coming quarters: Nomura

Our Bureau | | | Updated on: Dec 01, 2021
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India GDP growth projection for FY22 is at 9.2 per cent according to Nomura

Nomura on Wednesday said it expects continued economic normalisation in coming quarters, albeit with lower momentum.

"The outlook is more mixed, with improving mobility, but supply-side bottlenecks bogging down production, alongside signs of weakness in demand for mass consumption goods. We expect continued economic normalisation in coming quarters, albeit with lower momentum, and retain our FY22 GDP growth projection at 9.2 per cent y-o-y, while marking up 2021 to 8.2 per cent (vs. 7.7 per cent)," Nomura said in a report.

GDP growth moderated to 8.4 per cent y-o-y in Q3 2021 from 20.1 per cent in Q2 due to base effects, while rebounding sequentially (6.6 per cent q-o-q in Q3 vs. -8 per cent in Q2), reflecting a swift rebound from the second wave lows.

In level terms, GDP stood 2 percentage points higher than its pre-pandemic level (Q4 2019 =100). "The rebound was broad-based. On the supply side, the services and agricultural sectors outperformed in Q3, while on the demand side, private consumption and investment-led a rebound. Still, private consumption and the trade & transport sector remain 3 per cent and 9 per cent below their pre-pandemic levels (Q4 2019), respectively," Nomura said

"On policy, while the Omicron variant does add to the uncertainty, the baseline view still points to inflation rising towards the upper-end of the RBI’s 2-6 per cent target and cyclical growth recovery. As such, we see gradual policy normalisation as par for the course and maintain our view of a 40bp reverse repo rate hike at the December meeting, and a cumulative 75bp of repo and reverse repo rate hikes in 2022," it added.

Published on December 01, 2021

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