SBI Estimates India’s GDP Growth For Q3FY23 At 4.6%

In a research report, the State Bank of India on Tuesday estimated India’s gross domestic product (GDP) growth for Q3 FY23 at 4.6 per cent which is higher than the RBI estimates at 4.4 per cent. 

Interestingly, the SBI FY23 GDP forecast could see an upward revision from the current 6.8 per cent towards 7.0 per cent, as we anticipate revisions in GDP data for FY20, FY21 and FY22 that are going to be released on February 28, 2023. "Additionally, there will be revisions in quarterly numbers of FY20, FY21, FY22 and even FY23 (Q1 & Q2)," it added.

The report stated that corporate results, ex-BFSI, for Q3FY23 showed degrowth in EBIDTA by 9 per cent year on year (YoY) as against 18 per cent EBIDTA growth in Q3 FY23, though the top line continued to grow at a healthier pace. 

Notably, net sales grew by 15 per cent in Q3 FY23 while the bottom line was down by around 16 per cent. Further, corporate margin seems to be under pressure, as reflected in the results of around 3000 listed entities ex-BFSI, on account of higher input costs with decreasing EBIDTA margin, on an aggregate basis, from 15.3 per cent in Q3 FY22 to 11.9 per cent in Q3 FY23, it added.

According to the bank, "These could pull down the manufacturing growth in Q3 FY23."   

Meanwhile, the wide gap between the job vacancy rate (currently at 6.7%) and unemployment rate (currently at 3.4%) in the US currently indicates a strong labour market (also vindicated by significantly high quit rates). This is perplexing as ideally, the US labour market should have been showing signs of weakness by now.        

 Additionally, geopolitical uncertainty continues to rattle the global economic landscape. With the Russian aggression into Ukraine completing a year this week, we witness a domino effect coming in full force as tensions of formidable momentum, with meaty consequences for growth and prosperity for the majority of the world, take centre stage, it added.

Other than the lingering long war in Europe that dealt a heavy blow to food, energy and commodity security, there are fresh points of conflict erupting primarily in the Korean Peninsula and the Middle East.

While the US, with a sizeable presence in the pacific through its bases from Okinawa to Yongsan is mulling over the changing dynamics, with a keen eye on developments in the Taiwan strait, shifting sands in the war-prone and mercurial middle east are proving the Achilles heel, with the bonhomie between natural/strategic allies Iran and Syria posing new challenges to the majority nations of the Arabian desert. 

It mentioned that adding the influence exerted by bigger powers like China and Turkey, the supply of arms and ammunition could take precedence over the supply of food or energy. 

"This could also catapult the tensions brewing between the US and China to new dimensions, its impact on trade and access to resources greatly directing the economic trajectory of many economies, with growth becoming a clear loser," the report added.