Survey of Professional Forecasters (PF) India

December round of Forecasters survey shows strong growth and expects inflation to increase in Q4 2018-19.

Published bi-monthly by RBI since June 2014 (28th Round). Updated till December 2019 (56th Round). (Published on February 7th, 2019)

Recent Data Trend

As per the 56th round of Professional Forecasters (PF) survey, the real GDP is likely to grow by 7.2% YoY in 2018-19, and it further expects growth to accelerate to 7.3% YoY in 2019-20. The growth-pickup is expected on the back of support from private consumption as per the 28 forecasters surveyed by the RBI.

The industrial investment rate (Gross fixed capital formation to GDP) is expected to accelerate economic activity in 2018-19 and in 2019-20 with a growth of 29.1% YoY and 29.4% YoY, respectively. The industry and services sector are expected to accelerate economic activity in the country leading the Gross Value Added (GVA) to grow by 7% YoY in 2018-19 and by 7.2% YoY in 2019-20.

On the inflation front, the PF expect the headline inflation to gradually increase to reach 4.4% YoY by Q3 2019-20. The survey expects inflation to reach 3.1% in Q3 2018-19. Along with this the risks of underlying inflation as pointed by core inflation is likely to decrease gradually although it expects it to remain above the 5% mark till Q2 2019-20. It expects the core inflation to be around 5.6% in Q4 2018-19. With decline in concern over rise in inflation, RBI lowered the interest rate for the first time in a year and a half.

For the external sector, the PF expects merchandise exports and imports during 2018-19 to grow by 9.7% YoY and 12.2% YoY respectively. It lowered its export growth projections for 2019-20 by 1.3 percentage points to 7.6% YoY. The current account deficit (CAD) projection was revised to 2.5% of GDP until 2018-19 but it may improve in 2019-20.

In our view, a cut in the interest rate and sparking expectations of further rate cuts by MPC in the near future may make it cheaper for consumers and industry to borrow more and potentially boost growth. The rate easing coming just in time of the elections in which the government may use this convince voters is something that raises a lot of questions.

Brief Overview

Survey of Professional Forecasters on Macroeconomic Indicators represents views of independent professional forecasters on major macroeconomic indicators of short term to medium term economic developments. RBI has been conducting the survey since September 2007 on a quarterly basis and on a bi-monthly basis since June 2014. Forecasters affiliated with institutions that conduct regular research on the Indian economy, including investment banks and credit rating agencies, are invited to participate in this survey. It is done through a questionnaire responded by approx 25-30 forecasters/ panellists in each survey. The survey covers component-wise detailed forecasts of GDP growth, inflation, capital formation, consumption, expenditure, export, import, etc and is summarised in terms of their median forecasts, along with quarterly paths for key variables.

For more information, please visit the official government website.

Next Release Date: April 5th, 2019