Forecasting GDP growth of 8.5% for FY22, the SBI report says the beneficial effects of rapidly declining infections have been overwhelmed by the geopolitical conflagration since February 2022. the onset of supply shocks as the conflict escalates,” he said.

Against this backdrop, Q4 GDP figures are expected to be well below Q3, indicating a continued deceleration in growth since the start of the year. ONS imputed growth in the fourth quarter of FY22 is 4.8% and GVA growth is 4.1%.

He said the recovery of the Indian economy remained resilient, although risks stemming from global developments thwarted the momentum. Inflation risks have increased in recent months. Rising international commodity prices also lead to a net terms-of-trade shock that widens trade and current account deficits, according to the SBI report.

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“Nevertheless, we believe FY22 GDP figures could now approach 8.5% as Q4GDP figures according to the SBI nowcasting model. The other big conundrum could be the gap between GVA and GDP figures in the fourth quarter given the strong growth in tax revenue,” the report said. This could significantly increase the GDP figure, although the GVA could be much lower.

“We believe the GDP projection for the fourth quarter of FY22 is clouded by significant uncertainties,” the SBI study said.

For example, even a 1% downward revision to Q1 FY22 GDP estimates from 20.3%, all other things remaining unchanged, could push Q4 GDP growth to 3.8%. . The CSO had projected fourth quarter GDP at Rs 41.04 lakh crore and real GDP growth for FY22 at Rs 147.7 lakh crore, an improvement of 1.7% on pre-levels. the pandemic.

The SBI Nowcasting model with unchanged quarterly figures pegs the Q4GDP growth rate at Rs 40 lakh crores, which is lower by Rs 1 lakh crores than the CSO’s preliminary projections. “We believe that the downward adjustments to Q1, Q2 and Q3 numbers could have a calming impact on Q4 GDP numbers,” the report said.

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Each revision of Rs 10,000 crore adds or subtracts 7 basis points to GDP growth.

Beyond the numbers, the first trend in corporate Q4FY22 earnings, in the listed space, reported better growth numbers across all metrics compared to Q4FY21, albeit operating margin contraction due to rising input costs. Sectors such as steel, consumer goods, chemicals, computer software, automotive auxiliaries and paper recorded better growth figures. However, sectors such as automotive, cement, capital goods – electrical equipment and edible oil saw revenue growth in Q4FY22 but saw negative PAT growth, it said. -he declares.

Meanwhile, globally, while the average real GDP growth in the first quarter of 2022 for 25 economies at 5.5% is slightly higher than the previous quarter, GDP growth marks a sharp reversal in the main economies (United States, France, Italy and Sweden). The U.S. economy unexpectedly contracted in the first quarter of 2022 (on a sequential basis) amid a resurgence in COVID-19 cases and dwindling government pandemic relief funds, a he declared.

This is the first drop in GDP since the short and sharp pandemic recession nearly two years ago. Global financial volatility continues amid the protracted crisis between Russia and Ukraine. “However, after touching the 3% level, double its level at the start of the year and the highest since December 2018, the US 10-year yield has fallen in recent weeks mainly on growing fears of recession,” the report says.

Investors are already wary of rising inflationary pressures. However, some economic data, including new jobless claims hitting a 4-month high and a negative leading index, continued to raise concerns that price pressures are starting to weigh on economic growth.