ET Now In a chat with ET Now, Arun Singh, Senior Economist, Dun & Bradstreet India, shares his macroeconomic outlook. Excerpts:
ET Now: How are you really estimating the cue in GDP this time around? Are you also turning relatively optimistic now?
Arun Singh: As we earlier also said, the first two quarters of FY14-FY15 will see a slight consolidation phase, and the second half of FY14-FY15 will see a little bit of recovery and revival.
IIP numbers have improved close to 4%. Also, we had election this month and if you see, post the election period, the economic activity shoots up.
So net-net we are expecting a 5.2% growth, which is better than the previous quarter.
Going forward for a year as a whole, 5.5% for FY14-FY15’s first two quarters, we see this a little bit improvement compared to the previous year, may be 5.2 to 5.3% average for the first half.
In the second half we will see a slightly better growth and 5.7 to 5.8% is what we are expecting.
Mythili Bhusnurmath: Your estimate for the first quarter of 5.2 is well below what Nomura seems to suggest, also what our expert last Friday from Anand Rathi seemed to suggest of 5.6%. So what is it that is making you relatively more conservative?
Arun Singh: There are expectations of improvement. This 5.2 and 5.6 number is a merely statistics number.
For me, we are not as confident or as highly optimistic as others are. We are cognisant of what is happening on the inflation front, what is happening on the IIP, especially on the services front.
We have seen the services sector moderating significantly in the last two years. First of all, industrial improvement has to pick up and that will have impact on the services sector.
While industrial activity picked up during the first quarter, we are not expecting a significant jump in the agriculture sector, specially in food grain production. Secondly, in the services sector we are expecting a slight improvement.
So yes, there are some concerns around the overall macroeconomic number in the form of CPI, WPI. WPI, of course, is slightly better, but CPI was elevated. So demand has picked up, but not up to our expectations.
Mythili Bhusnurmath: And what is your prediction for oil prices? Will the softness in the market continue?
Arun Singh: That is contingent on the geopolitical tension and what is happening in the international market. As of now, if our assumptions are met of whatever we are expecting, ideally it should remain at the same level or there may be slightly downside pressure over the next couple of months. The next couple of months will decide, provided there are no fresh concerns on the international market. That will decide where global crude oil prices will hit.
In view of the fact that there are still some tensions and this will take its own time to subside, maybe over the next three months, we can see volatility in the crude oil prices.
ET Now: How are you really estimating the cue in GDP this time around? Are you also turning relatively optimistic now?
Arun Singh: As we earlier also said, the first two quarters of FY14-FY15 will see a slight consolidation phase, and the second half of FY14-FY15 will see a little bit of recovery and revival.
IIP numbers have improved close to 4%. Also, we had election this month and if you see, post the election period, the economic activity shoots up.
So net-net we are expecting a 5.2% growth, which is better than the previous quarter.
Going forward for a year as a whole, 5.5% for FY14-FY15’s first two quarters, we see this a little bit improvement compared to the previous year, may be 5.2 to 5.3% average for the first half.
In the second half we will see a slightly better growth and 5.7 to 5.8% is what we are expecting.
Mythili Bhusnurmath: Your estimate for the first quarter of 5.2 is well below what Nomura seems to suggest, also what our expert last Friday from Anand Rathi seemed to suggest of 5.6%. So what is it that is making you relatively more conservative?
Arun Singh: There are expectations of improvement. This 5.2 and 5.6 number is a merely statistics number.
For me, we are not as confident or as highly optimistic as others are. We are cognisant of what is happening on the inflation front, what is happening on the IIP, especially on the services front.
We have seen the services sector moderating significantly in the last two years. First of all, industrial improvement has to pick up and that will have impact on the services sector.
While industrial activity picked up during the first quarter, we are not expecting a significant jump in the agriculture sector, specially in food grain production. Secondly, in the services sector we are expecting a slight improvement.
So yes, there are some concerns around the overall macroeconomic number in the form of CPI, WPI. WPI, of course, is slightly better, but CPI was elevated. So demand has picked up, but not up to our expectations.
Mythili Bhusnurmath: And what is your prediction for oil prices? Will the softness in the market continue?
Arun Singh: That is contingent on the geopolitical tension and what is happening in the international market. As of now, if our assumptions are met of whatever we are expecting, ideally it should remain at the same level or there may be slightly downside pressure over the next couple of months. The next couple of months will decide, provided there are no fresh concerns on the international market. That will decide where global crude oil prices will hit.
In view of the fact that there are still some tensions and this will take its own time to subside, maybe over the next three months, we can see volatility in the crude oil prices.
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