The biggest story this morning was the slowing of the Indian economy. Q3 gross domestic product (GDP) has come in slightly below expectations, at 6.6 percent with FY19 growth at 7 percent. Jahangir Aziz, Head of emerging markets and economic research at JP Morgan shared his views and outlook.

“There is no sense of whether or not the economy is stalling, moving up or slowing down, it has been 4-5 years now and we do not have any standard stable seasonal adjustments. It is almost impossible to get what is happening on a quarter-to-quarter basis (QoQ),” he said.

He further added, “In 2019, it is unfortunate that we are spending so much of time to figure out whether it was the base effect or something else that drove the 6.6 percent. Just looking at the GDP numbers, it doesn’t make any sense of what the economy is doing. Having said that, even if you look on a year-on-year (YoY) basis, the numbers weren’t that bad.”

Aziz thinks that the Reserve Bank of India (RBI) is pretty much biased towards easing monetary policy and supporting growth. The RBI will use that to justify another rate cut, given the fact that the Fed has significantly shifted its stance in the last FOMC. All of that clears the path for two more rate cuts going forward.

The JP Morgan researcher is sure that there will be one rate cut in April and another in June. He further claims that the problem lies within rural sector from last 2-3 quarters in terms of growth. According to him, the Indian economy is bottoming out in Q1CY19.

First Published:Mar 1, 2019 12:34 PM IST