Even as growth rates pegged to be grinding lower in India in the next calendar year (2020, or CY20), global gross domestic product
(GDP) rate is set to stabilise next year and start looking up from the second half of the year into 2021, leading brokerages have said.
However, for this to happen, they expect trade tensions to ease, jobs to grow and consumption in the US to remain robust and central bank stimulus to gain some traction.
As regards India, most economists remain cautious. Analysts at Nomura, for instance, expect growth to slow further in the fourth quarter (Q4) and peg the 2020 estimate at 5.5 per cent as against a consensus estimate of 6.3 per cent. On a financial year basis, they expect GDP
growth of 4.7 per cent in FY20 and 5.7 per cent in FY21, suggesting a delayed recovery and below-potential growth through end-2020.
“Domestic credit conditions remain tight as market concerns in the shadow banking sector have persisted for too long, in our opinion. Hence, we believe India’s growth is set to slow further in Q4, delaying the recovery expected by consensus,” wrote Sonal Varma, managing director and chief India economist at Nomura
in a co-authored Asia Outlook 2020 report with Aurodeep Nandi.
Those at CARE Ratings, too, expect the pick-up to be gradual and spread out over the next two-three years, given that the problems are structural in nature. “While optically the number can be around 5.5 per cent to 6 per cent in 2020, a meaningful pick-up that can take the GDP
around the 8 per cent mark is still a two–three years away,” says Madan Sabnavis, chief economist at CARE Ratings.