Professional Forecasters Survey Cautiously Optimistic on India's Recovery

CEIC India Data Talk - February 18, 2014 - India's professional forecasters are expecting a measured economic recovery during the financial year (FY) 2014-15 (ending March 2015), according to the 26th round of the Professional Forecasters' Survey (PFS) carried out by the Reserve Bank of India (RBI) in the quarter ended December 2013. The RBI has been conducting the survey at quarterly intervals since September 2007. 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. The PFS forecasts a wide spectrum of salient macroeconomic indicators, including output, prices, external sector variables and the government's finances. The latest survey forecasts a gradual improvement in real GDP (in factor prices) over the four quarters to December 2014. In particular, output growth is projected to improve from the 4.83% registered in the quarter ended September 2013, to 5.6% during the quarter ended December 2014. Meanwhile, the outlook for GDP growth in FY 2013-14 has remained unchanged from the previous survey, with the median growth forecast fixed at 4.8%, in line with the Central Statistics Office's advance estimate of 4.86% released in early February 2014. Looking further ahead, the panel of 30 forecasters now expects real GDP to expand by 5.6% in FY 2014-15 as a whole, a little below the 5.8% anticipated during the previous, 25th round of the survey. In tandem with the expectation of a mild economic recovery, forecasters continue to predict that disinflation is underway, although they are cautious over the extent to which inflationary pressures will weaken. In the 26th round of the survey, the expected average Wholesale Price Index (WPI) inflation rates for FY 2013-14 and FY 2014-15 are higher, at 6.4% and 6.0% respectively, compared with the previous estimates of 6.0% and 5.5% reported in the 25th round. While forecasters now perceive wholesale price inflation to be more resilient, the latest forecasts still represent a noticeable step down from the 7-9% highs recorded in the preceding two financial years. The latest survey sees WPI inflation remaining above 6% until the quarter ended December 2014. On the other hand, the survey's contributors are sanguine about prospects for the external sector. Forecasted growth in merchandise exports for FY 2013-14 has been revised upwards to 6.3% from a growth rate of 3.8% during the quarter ended September 2013, whereas merchandise imports during the same period are now expected to decline by 3.7%, a much faster pace than the 1.9% decline predicted in the previous survey. Consequently, the projected Current Account Deficit (CAD) now stands at 2.7% of GDP for FY 2013-14, a significant improvement from the 4.76% of GDP recorded in FY 2012-13. However, the Central Government Gross Fiscal Deficit is expected to reach 5% of GDP in the current fiscal year, overshooting its budget target of 4.8% of GDP. The Professional Forecasters' Survey provides insights into how economic agents appraise future economic conditions. Given the forward-looking nature of the survey, the results signal potential macroeconomic developments and risks. However, the Professional Forecasters' Survey itself does not reflect the views or projections of the Reserve Bank of India. By Yan Ting Hin - CEIC Analyst Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription. Back to Blog
19th February 2014 Professional Forecasters Survey Cautiously Optimistic on India's Recovery