- Wealth PMS
The First Quarter 2014 (June 2013) Gross Domestic Product (GDP) data release shows that Indian growth has dropped to 4.4% in “real” terms (meaning, after removing inflation).
Looking at what caused this rise in GDP – let’s look at real rates in its components:
Now lets also look at nominal growth (basically, growth in rupee terms without backing out inflation):
Important things to note:
If we factored in 9% inflation, our growth has actually been NEGATIVE. (Nominal growth is around 8.2%)
And then, let’s look at Sectors:
Service Growth has been big, and has saved the day. But it stands out as an exception.
However everything else, from Agriculture to Construction to Mining (Negative) to Manufacturing (Negative) have seen a slowdown.
Impact: We are coming close to a recession, or already in one, depending on what you consider the GDP deflator – wholesale price inflation or consumer price inflation. This is the slowest growth for a long time, even if you consider the nominal rate dip in 2008 as an anomaly.
This is not a V-shaped recovery like it was the last time, I predict. We have serious headwinds and will need to brace ourselves for a rough ride ahead. Most people haven’t even seen the last real downturn, and neither have many bankers.
However, in crisis lies opportunity. Your competitors will be in trouble. It’s time to work your magic and win.