SBI Ecowrap – Q2 FY22 GDP pegged at 8.1%

Based on the SBI Nowcasting model, the forecasted GDP growth for Q2 FY22 would be around 8.1% (with upward bias). The model uses the dynamic factor model to estimate the common or representative or latent factor of all the 41 high-frequency indicators from Q4 of FY13 to Q2 of FY22. Q2 GVA is estimated at 7.1%. We now believe that the FY22 GDP growth rate could be in the range of 9.3%-9.6%. The reason for the upward revision is that India recorded only an 11% increase in Covid cases during Q3 2021, second-lowest among the top 15 most affected countries, and the increase in cases has declined to 2.3% in Nov’21 over Sep’21. So far, 115.79 vaccine doses have been administered, with 81% of the eligible population receiving at least a single dose and 42% of the eligible population both doses. In certain states including Himachal Pradesh, Gujarat, Uttarakhand, Kerala, Karnataka, Telangana, and Madhya Pradesh more than 50% of the eligible population has been fully vaccinated.

India’s projected 8.1% growth rate in Q2 (FY22) is the highest growth across all economies. The average GDP growth of 28 selected economies has decelerated to 4.5% in Q3 (2021) as against 12.1%. Also at an annual rate of 9.3-9.6%, India’s real GDP growth would now be 1.5%-1.7% higher than the pre-pandemic level of FY20.