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The GDP growth rate slumped to its weakest in the current series, slipping to 5.3% in Q4FY12, below market and our expectation of 6.2%. Growth was weighed down by a contraction in manufacturing (down 0.3% yoy) and moderation in growth of ‘trade, hotels & transport’ to 7% yoy. Industrial growth moderated to 1.9% yoy from 2.5% in the previous quarter. Momentum in services also slowed down, with growth slipping to 7.9% yoy from 8.9% in the previous quarter. Lower-than-anticipated economic growth in Q4FY12 translates into 6.5% growth for FY12E as against an advance estimate of 6.9% yoy. Trends in PMI indices and 8 core industries data suggest that growth is likely to remain muted in H1FY13. As a result, we have downgraded our FY13 GDP growth estimate to 6.6% from 7%. With downside risks to growth gaining pace and ‘core inflation’ on a downward trajectory, we expect the apex bank to cut repo rates by another ~50bp in FY13.
Q4FY12 GDP performance
Real (% yoy)
|
Nominal (% yoy)
| |||||
Q4FY11
|
Q3FY12
|
Q4FY12
|
Q4FY11
|
Q3FY12
|
Q4FY12
| |
Agriculture, forestry & fishing
|
7.5
|
2.8
|
1.7
|
16.0
|
10.1
|
7.4
|
Mining & quarrying
|
0.6
|
(2.8)
|
4.3
|
14.5
|
14.9
|
23.8
|
Manufacturing
|
7.3
|
0.6
|
(0.3)
|
15.2
|
8.6
|
5.6
|
Electricity, gas & water supply
|
5.1
|
9.0
|
4.9
|
10.6
|
11.9
|
9.0
|
Construction
|
8.9
|
6.6
|
4.8
|
17.5
|
16.3
|
12.3
|
Industry
|
7.0
|
2.5
|
1.9
|
15.5
|
11.8
|
9.6
|
Trade, hotels, transport & commn.
|
11.6
|
10.0
|
7.0
|
17.8
|
18.6
|
12.9
|
Financing, insurance, real estate & business services
|
10.0
|
9.1
|
10.0
|
21.2
|
19.1
|
17.6
|
Community, social & personal services
|
9.5
|
6.4
|
7.1
|
20.1
|
15.8
|
14.7
|
Services
|
10.6
|
8.9
|
7.9
|
19.4
|
18.1
|
14.7
|
GDP at factor cost
|
9.2
|
6.1
|
5.3
|
17.7
|
14.7
|
12.0
|
Private Final Consumption Expenditure
|
5.2
|
6.4
|
6.1
|
12.7
|
15.2
|
13.9
|
Government Final Consumption Expenditure
|
13.6
|
4.7
|
4.1
|
15.2
|
13.4
|
12.7
|
Gross Fixed Capital Formation
|
(3.2)
|
(0.3)
|
3.6
|
4.3
|
7.3
|
9.3
|
Change in Stocks
|
8.0
|
0.4
|
(0.4)
|
16.2
|
10.0
|
7.0
|
Valuables
|
8.0
|
0.4
|
(0.4)
|
16.2
|
10.0
|
7.0
|
Exports
|
35.4
|
6.1
|
18.1
|
45.8
|
15.0
|
26.1
|
Less Imports
|
15.8
|
27.0
|
2.0
|
27.0
|
39.5
|
8.7
|
GDP at market prices
|
3.3
|
(1.9)
|
8.6
|
17.4
|
14.8
|
12.2
|
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