Growth is expected to firm up in 2017-18 and 2018-19 on the back of higher private consumption and investment demand, according to the 32 forecasters surveyed by the Reserve Bank. CPI inflation is expected to gradually rise to 4.9 per cent by Q1:2018-19. The Reserve Bank has been conducting the Survey of Professional Forecasters (SPF) since September 2007. Thirty two panelists participated in the 49th round of the survey conducted during November 20172. The survey results are summarised in terms of their median forecasts and consolidated in Annexes 1-8, along with quarterly paths for key variables. Highlights: 1. Output • Real gross domestic product (GDP) and real gross value added (GVA) are likely to grow by 6.7 and 6.5 per cent, respectively, in 2017-18 and rise further by 80-90 basis points (bps) in 2018-19 on the back of increases in private consumption and investment demand (Table 1). • The saving rate is projected to increase in both the years, although expectations have moderated from the last survey round. | Table 1: Median Forecast of Growth in Real GDP, GVA and Components | | (in per cent) | | | 2017-18 | 2018-19 | | Real GDP Growth | 6.7
(-0.1) | 7.5
(+0.1) | | Real GVA Growth | 6.5
(-0.1) | 7.4
(0.0) | | a. Agriculture and Allied Activities | 3.0
(-0.2) | 3.0
(0.0) | | b. Industry | 4.7
(-0.1) | 6.8
(-0.2) | | c. Services | 8.1
(0.0) | 8.4
(-0.3) | Private Final Consumption Expenditure (nominal)
(growth rate in per cent) | 11.0
(0.0) | 12.5
(-0.2) | Gross Saving Rate
[per cent of gross national deposable income (GNDI)] | 31.0
(-0.2) | 31.5
(-0.8) | Gross Fixed Capital Formation Rate
(per cent of GDP) | 26.5
(0.0) | 27.9
(+0.3) | | Note: In all the tables, the figures in parentheses indicate the extent of revision in median forecasts (percentage points) relative to the previous SPF round. |
• The summary probability distribution of GVA growth forecasts for 2017-18 is more positively skewed than in previous survey rounds: forecasters have assigned maximum probability to growth being in the range 6.5-6.9 per cent (Chart 1). • For 2018-19, forecasters have assigned maximum probability to GVA growth in the range 7.0-7.4 per cent, with the distribution having shifted marginally to the right as compared with the previous round of the survey (Chart 2). 2. Inflation • Headline consumer price index (CPI) inflation is expected to gradually increase till Q1:2018-19 and moderate thereafter (Table 2). • Core inflation (i.e., CPI excluding food and beverages, pan, tobacco and intoxicants, and fuel and light), which is currently higher than headline inflation, is also expected to peak in Q1:2018-19. | Table 2: Median Forecast of Quarterly Inflation | | (in per cent) | | | Q3:17-18 | Q4:17-18 | Q1:18-19 | Q2:18-19 | | CPI- Headline | 3.9
(-0.2) | 4.4
(-0.1) | 4.9
(-0.1) | 4.5
(0.0) | | CPI excluding food & beverages, pan, tobacco & intoxicants and fuel & light | 4.6
(0.0) | 4.8
(0.0) | 5.2
(+0.3) | 4.9
(0.0) | | WPI – All Commodities | 3.5
(+0.3) | 3.0
(+0.2) | 3.7
(+0.3) | 3.9
(+0.6) | | WPI – Non-food Manufactured Products | 2.9
(+0.4) | 2.7
(+0.2) | 2.8
(+0.1) | 3.1
(+0.3) |
• Forecasters assigned the highest probability to CPI inflation being in the range 4.0-4.4 per cent in March 2018 (Chart 3). • The summary probability distribution of forecasts is flatter for March 2019 than in previous rounds of the survey: forecasters assigned the highest probability to CPI inflation being in the range 4.0-4.4 per cent (Chart 4). 3. External Sector • Forecasters are more positive on the export and import growth during 2017-18 than in the last survey round even though their projections for 2018-19 are somewhat lower (Table 3). • The current account deficit (CAD) for 2018-19 is expected to be around the current year’s level. • The exchange rate is likely to remain range-bound during the next four quarters (Annex 3). | Table 3: Median Forecast of Select External Sector Variables | | | 2017-18 | 2018-19 | Merchandise Exports – in US $ terms
(annual growth in per cent) | 7.9
(+1.4) | 7.5
(-0.4) | Merchandise Imports– in US $ terms
(annual growth in per cent) | 13.0
(+1.5) | 7.6
(-1.9) | Current Account Deficit
(Ratio to GDP at current market price, in per cent) | 1.6
(+0.1) | 1.7
(-0.1) | 4. Medium-term and Long-term Forecasts • Real GVA growth is expected to be around 7.5 per cent - similar to the last survey round - in the medium-term (five-year average) and 7.6 per cent in the long-term (ten-year average), an increase of 10 bps from the previous survey round (Charts 5 and 6).
• CPI-headline inflation is expected to be around 4.5 and 4.3 per cent in the medium-term and the long-term, respectively - an increase of 20 bps over the previous round of the survey (Charts 7 and 8).
The Reserve Bank thanks the following institutions for their participation in this round of the Survey of Professional Forecasters (SPF): Aditi Nayar, ICRA Limited; Arun Singh, Dun & Bradstreet India; CRISIL Ltd; Debopam Chaudhuri, Piramal Enterprises Limited; Deepali Bhargava, Credit Suisse; ICICI Securities Primary Dealership Ltd.; Gaurav Kapur, IndusInd Bank Ltd.; Nikhil Gupta, Motilal Oswal Securities Ltd.; PHD Research Bureau; Sameer Narang, Bank of Baroda; Sumedh Deorukhkar, BBVA Hong Kong; and Upasna Bhardwaj, Kotak Mahindra Bank. The Bank also acknowledges the contribution of 20 others SPF panelists, who preferred to remain anonymous, to the survey. |
| Annex 1: Annual Forecasts for 2017-18 | | | Key Macroeconomic Indicators | Annual Forecasts for 2017-18 | | Mean | Median | Max | Min | 1st quartile | 3rd quartile | | 1 | GDP at constant (2011-12) prices: Annual Growth (per cent) | 6.7 | 6.7 | 7.0 | 6.0 | 6.7 | 6.7 | | 2 | GVA at basic prices at constant (2011-12) prices: Annual Growth rate (per cent) | 6.5 | 6.5 | 6.8 | 5.8 | 6.5 | 6.5 | | a | Agriculture & Allied Activities (growth rate in per cent) | 2.9 | 3.0 | 4.0 | 1.1 | 2.9 | 3.0 | | b | Industry (growth rate in per cent) | 4.7 | 4.7 | 6.8 | 2.6 | 4.7 | 4.7 | | c | Services (growth rate in per cent) | 8.1 | 8.1 | 9.0 | 7.0 | 8.1 | 8.1 | | 3 | Private Final Consumption Expenditure (PFCE) at current prices: Annual Growth (per cent) | 10.8 | 11.0 | 13.2 | 6.7 | 10.8 | 11.0 | | 4 | Gross Saving Rate (per cent of Gross National Disposable Income) - at current prices | 31.0 | 31.0 | 35.2 | 28.2 | 31.0 | 31.0 | | 5 | Gross Fixed Capital Formation (GFCF) Rate (per cent of GDP at current market prices) | 26.7 | 26.5 | 30.7 | 20.6 | 26.7 | 26.5 | | 6 | Fiscal Deficit of Central Govt. (per cent of GDP at current market prices) | 3.3 | 3.3 | 3.6 | 3.2 | 3.3 | 3.3 | | 7 | Combined Gross Fiscal Deficit (per cent to GDP) | 6.4 | 6.5 | 6.7 | 6.0 | 6.4 | 6.5 | | 8 | Bank Credit - Scheduled commercial banks: Annual Growth (per cent) | 8.0 | 8.0 | 11.1 | 3.8 | 8.0 | 8.0 | | 9 | Yield on 10-Year G-Sec of Central Govt. (end-period) | 6.8 | 6.8 | 7.3 | 6.4 | 6.8 | 6.8 | | 10 | Yield on 91-day T-Bill of Central Govt. (end-period) | 6.1 | 6.1 | 6.4 | 5.7 | 6.1 | 6.1 | | 11 | BSE Sensex (end-December) | 29150.0 | 33000.0 | 34000.0 | 3200.0 | 29150.0 | 33000.0 | | 12 | Merchandise Exports - BoP basis - In US $ bn. | 301.6 | 301.0 | 325.0 | 289.2 | 301.6 | 301.0 | | 13 | Merchandise Exports - BoP basis - Annual Growth (per cent) | 7.9 | 7.9 | 17.2 | 3.2 | 7.9 | 7.9 | | 14 | Merchandise Imports - BoP basis - In US $ bn. | 436.2 | 442.0 | 470.0 | 313.0 | 436.2 | 442.0 | | 15 | Merchandise Imports - BoP basis - Annual Growth (per cent) | 12.8 | 13.0 | 19.7 | 3.5 | 12.8 | 13.0 | | 16 | Current Account Balance - In US $ bn. | -40.0 | -41.9 | -18.9 | -65.0 | -45.9 | -35.1 | | 17 | Current Account Balance - Ratio to GDP at current market price (per cent) | -1.6 | -1.6 | -1.1 | -2.5 | -1.6 | -1.6 | | 18 | Overall BoP - In US $ bn. | 27.4 | 29.4 | 41.9 | 6.9 | 27.4 | 29.4 | | 19 | Inflation based on CPI-Combined - Headline | 3.5 | 3.4 | 4.3 | 3.1 | 3.5 | 3.4 | | 20 | Inflation based on CPI-Combined - excluding 'Food & Beverages', 'Pan, Tobacco & Intoxicants' and 'Fuel & Light' | 4.5 | 4.5 | 5.2 | 4.2 | 4.5 | 4.5 | | 21 | Inflation based on WPI - All Commodities | 2.9 | 2.9 | 3.9 | 2.3 | 2.9 | 2.9 | | 22 | Inflation based on WPI -Non-food Manufactured Products | 2.6 | 2.6 | 3.6 | 2.2 | 2.6 | 2.6 |
| Annex 2: Annual Forecasts for 2018-19 | | | Key Macroeconomic Indicators | Annual Forecasts for 2018-19 | | Mean | Median | Max | Min | 1st quartile | 3rd quartile | | 1 | GDP at constant (2011-12) prices: Annual Growth (per cent) | 7.4 | 7.5 | 7.9 | 6.4 | 7.4 | 7.5 | | 2 | GVA at basic prices at constant (2011-12) prices: Annual Growth rate (per cent) | 7.2 | 7.4 | 7.7 | 6.3 | 7.2 | 7.4 | | a | Agriculture & Allied Activities (growth rate in per cent) | 3.2 | 3.0 | 5.0 | 1.0 | 3.2 | 3.0 | | b | Industry (growth rate in per cent) | 6.8 | 6.8 | 8.8 | 4.5 | 6.8 | 6.8 | | c | Services (growth rate in per cent) | 8.4 | 8.4 | 9.6 | 7.0 | 8.4 | 8.4 | | 3 | Private Final Consumption Expenditure (PFCE) at current prices: Annual Growth (per cent) | 12.4 | 12.5 | 15.2 | 8.0 | 12.4 | 12.5 | | 4 | Gross Saving Rate (per cent of Gross National Disposable Income) - at current prices | 31.0 | 31.5 | 33.9 | 27.3 | 31.0 | 31.5 | | 5 | Gross Fixed Capital Formation (GFCF) Rate (per cent of GDP at current market prices) | 27.9 | 27.9 | 34.0 | 24.0 | 27.9 | 27.9 | | 6 | Fiscal Deficit of Central Govt. (per cent of GDP at current market prices) | 3.1 | 3.0 | 3.5 | 3.0 | 3.1 | 3.0 | | 7 | Combined Gross Fiscal Deficit (per cent to GDP) | 6.1 | 6.1 | 6.5 | 5.6 | 6.1 | 6.1 | | 8 | Bank Credit - Scheduled commercial banks: Annual Growth (per cent) | 10.5 | 10.5 | 13.0 | 7.2 | 10.5 | 10.5 | | 9 | Yield on 10-Year G-Sec of Central Govt. (end-period) | 6.9 | 7.0 | 7.5 | 6.2 | 6.9 | 7.0 | | 10 | Yield on 91-day T-Bill of Central Govt. (end-period) | 6.1 | 6.2 | 6.5 | 5.6 | 6.1 | 6.2 | | 11 | BSE Sensex (end-December) | 34820.0 | 35000.0 | 36500.0 | 33500.0 | 34820.0 | 35000.0 | | 12 | Merchandise Exports - BoP basis - In US $ bn. | 332.3 | 324.6 | 443.6 | 305.0 | 332.3 | 324.6 | | 13 | Merchandise Exports - BoP basis - Annual Growth (per cent) | 8.1 | 7.5 | 20.0 | 4.4 | 8.1 | 7.5 | | 14 | Merchandise Imports - BoP basis - In US $ bn. | 481.0 | 477.1 | 620.0 | 413.7 | 481.0 | 477.1 | | 15 | Merchandise Imports - BoP basis - Annual Growth (per cent) | 9.1 | 7.6 | 31.9 | 4.8 | 9.1 | 7.6 | | 16 | Current Account Balance - In US $ bn. | -47.5 | -48.0 | -21.0 | -67.7 | -55.6 | -42.7 | | 17 | Current Account Balance - Ratio to GDP at current market price (per cent) | -1.8 | -1.7 | -1.0 | -2.8 | -1.8 | -1.7 | | 18 | Overall BoP - In US $ bn. | 20.8 | 22.8 | 50.0 | 3.0 | 20.8 | 22.8 | | 19 | Inflation based on CPI-Combined - Headline | 4.5 | 4.4 | 5.5 | 3.9 | 4.5 | 4.4 | | 20 | Inflation based on CPI-Combined - excluding 'Food & Beverages', 'Pan, Tobacco & Intoxicants' and 'Fuel & Light' | 4.9 | 4.9 | 6.4 | 4.0 | 4.9 | 4.9 | | 21 | Inflation based on WPI - All Commodities | 3.6 | 3.5 | 5.5 | 2.4 | 3.6 | 3.5 | | 22 | Inflation based on WPI -Non-food Manufactured Products | 3.1 | 2.9 | 5.2 | 1.4 | 3.1 | 2.9 |
| Annex 3: Quarterly Forecasts from Q1:2017-18 to Q1:2018-19 | | | Key Macroeconomic Indicators | Quarterly Forecasts | | Q3: 2017-18 | Q4: 2017-18 | | Mean | Median | Max | Min | Mean | Median | Max | Min | | 1 | GDP at constant (2011-12) prices: Annual Growth (per cent) | 6.9 | 7.0 | 8.0 | 5.9 | 7.3 | 7.2 | 8.1 | 6.3 | | 2 | GVA at constant (2011-12) prices: Annual Growth (per cent) | 6.7 | 6.7 | 7.5 | 5.5 | 7.0 | 7.1 | 7.8 | 6.2 | | a | Agriculture & Allied Activities (growth rate in per cent) | 3.2 | 3.0 | 5.3 | 1.6 | 3.5 | 3.3 | 6.0 | 1.2 | | b | Industry (growth rate in per cent) | 5.5 | 5.7 | 9.6 | 2.2 | 6.3 | 6.2 | 9.9 | 3.9 | | c | Services (growth rate in per cent) | 8.3 | 8.3 | 10.2 | 7.1 | 8.3 | 8.1 | 9.5 | 7.2 | | 3 | PFCE at current prices: Y-on-Y Growth (per cent) | 11.2 | 10.9 | 14.3 | 9.6 | 11.6 | 11.7 | 14.8 | 9.0 | | 4 | GFCF Rate (per cent of GDP at current market prices) | 27.1 | 26.7 | 30.0 | 25.1 | 27.0 | 25.9 | 30.7 | 24.6 | | 5 | IIP (2011-12=100): Quarterly Average Growth (per cent) | 4.1 | 3.7 | 5.7 | 3.1 | 4.4 | 4.2 | 6.2 | 3.6 | | 6 | Merchandise Exports - BoP basis (in US$ bn.) | 76.4 | 75.4 | 93.0 | 72.0 | 82.4 | 80.5 | 102.3 | 75.0 | | 7 | Merchandise Imports - BoP basis (in US$ bn.) | 113.1 | 110.4 | 133.6 | 106.9 | 115.8 | 111.5 | 160.3 | 106.4 | | 8 | Rupee - US_Dollar Exchange rate (RBI reference rate) (end-period) | 65.1 | 65.0 | 66.0 | 64.0 | 65.2 | 65.1 | 67.4 | 63.7 | | 9 | Crude Oil (Indian basket) price (US $ per barrel) (end-period) | 59.2 | 60.0 | 63.0 | 50.0 | 59.2 | 60.0 | 65.0 | 53.0 | | 10 | Repo Rate (end-period) | 5.98 | 6.00 | 6.00 | 5.75 | 5.95 | 6.00 | 6.00 | 5.75 |
| | Key Macroeconomic Indicators | Quarterly Forecasts | | Q1: 2018-19 | Q2: 2018-19 | | Mean | Median | Max | Min | Mean | Median | Max | Min | | 1 | GDP at constant (2011-12) prices: Annual Growth (per cent) | 7.3 | 7.5 | 7.8 | 6.4 | 7.4 | 7.5 | 8.1 | 6.5 | | 2 | GVA at constant (2011-12) prices: Annual Growth (per cent) | 7.1 | 7.3 | 7.6 | 6.2 | 7.2 | 7.4 | 7.8 | 6.4 | | a | Agriculture & Allied Activities (growth rate in per cent) | 3.2 | 3.0 | 5.1 | 2.2 | 3.2 | 3.0 | 5.1 | 1.3 | | b | Industry (growth rate in per cent) | 6.7 | 6.8 | 9.5 | 4.2 | 6.4 | 6.2 | 8.6 | 4.5 | | c | Services (growth rate in per cent) | 8.3 | 8.4 | 9.1 | 7.1 | 8.4 | 8.5 | 9.5 | 7.2 | | 3 | PFCE at current prices: Y-on-Y Growth (per cent) | 12.2 | 12.5 | 14.5 | 10.0 | 12.4 | 12.8 | 14.6 | 10.5 | | 4 | GFCF Rate (per cent of GDP at current market prices) | 28.1 | 27.5 | 31.1 | 25.6 | 27.7 | 27.3 | 31.0 | 25.0 | | 5 | IIP (2011-12=100): Quarterly Average Growth (per cent) | 4.9 | 4.6 | 7.4 | 3.7 | 4.7 | 4.5 | 7.1 | 3.1 | | 6 | Merchandise Exports - BoP basis (in US$ bn.) | 82.4 | 79.0 | 112.5 | 74.7 | 84.9 | 80.8 | 120.3 | 74.0 | | 7 | Merchandise Imports - BoP basis (in US$ bn.) | 126.1 | 122.6 | 184.3 | 107.9 | 128.2 | 116.8 | 211.9 | 110.1 | | 8 | Rupee - US_Dollar Exchange rate (RBI reference rate) (end-period) | 65.1 | 65.0 | 66.8 | 63.2 | 65.3 | 65.5 | 67.0 | 62.0 | | 9 | Crude Oil (Indian basket) price (US $ per barrel) (end-period) | 58.1 | 58.2 | 64.0 | 52.5 | 57.7 | 58.5 | 64.0 | 50.5 | | 10 | Repo Rate (end-period) | 5.95 | 6.00 | 6.00 | 5.75 | 5.95 | 6.00 | 6.25 | 5.50 |
| Annex 4: Forecasts of CPI-Combined Inflation | | (per cent) | | | CPI Combined Headline | Core CPI Combined
(excluding ‘Food & Beverages’, 'Pan, Tobacco & Intoxicants' and ‘Fuel & Light’) | | Mean | Median | Max | Min | Mean | Median | Max | Min | | Q3:2017-18 | 3.9 | 3.9 | 4.4 | 3.0 | 4.5 | 4.6 | 5.4 | 1.6 | | Q4:2017-18 | 4.3 | 4.4 | 5.2 | 3.5 | 4.7 | 4.8 | 5.9 | 1.8 | | Q1:2018-19 | 4.8 | 4.9 | 5.9 | 3.8 | 5.1 | 5.2 | 6.3 | 1.7 | | Q2:2018-19 | 4.5 | 4.5 | 5.6 | 3.7 | 5.0 | 4.9 | 6.7 | 1.3 |
| Annex 5: Forecasts of WPI Inflation | | (per cent) | | | WPI Headline | WPI-Manufactured Products | | Mean | Median | Max | Min | Mean | Median | Max | Min | | Q3:2017-18 | 3.5 | 3.5 | 6.5 | 2.3 | 2.9 | 2.9 | 4.5 | 2.2 | | Q4:2017-18 | 2.9 | 3.0 | 5.5 | 1.6 | 2.7 | 2.7 | 5.0 | 1.6 | | Q1:2018-19 | 3.8 | 3.7 | 5.1 | 2.5 | 2.7 | 2.8 | 4.2 | 1.3 | | Q2:2018-19 | 4.0 | 3.9 | 5.6 | 2.6 | 3.0 | 3.1 | 4.9 | 1.5 |
| Annex 6: Mean probabilities attached to possible outcomes of Real GVA growth | | Growth Range | Forecasts for 2017-18 | Forecasts for 2018-19 | | 10.0 per cent or more | 0.00 | 0.00 | | 9.5 to 9.9 per cent | 0.00 | 0.00 | | 9.0 to 9.4 per cent | 0.00 | 0.00 | | 8.5 to 8.9 per cent | 0.00 | 0.01 | | 8.0 to 8.4 per cent | 0.00 | 0.05 | | 7.5 to 7.9 per cent | 0.00 | 0.27 | | 7.0 to 7.4 per cent | 0.07 | 0.44 | | 6.5 to 6.9 per cent | 0.52 | 0.19 | | 6.0 to 6.4 per cent | 0.34 | 0.05 | | 5.5 to 5.9 per cent | 0.06 | 0.00 | | 5.0 to 5.4 per cent | 0.01 | 0.00 | | 4.5 to 4.9 per cent | 0.00 | 0.00 | | 4.0 to 4.4 per cent | 0.00 | 0.00 | | 3.5 to 3.9 per cent | 0.00 | 0.00 | | 3.0 to 3.4 per cent | 0.00 | 0.00 | | 2.5 to 2.9 per cent | 0.00 | 0.00 | | 2.0 to 2.4 per cent | 0.00 | 0.00 | | Below 2.0 per cent | 0.00 | 0.00 |
| Annex 7: Mean probabilities attached to possible outcomes of CPI (Combined) inflation | | Inflation Range | Forecasts for March 2018 | Forecasts for March 2019 | | 8.0 per cent or above | 0.00 | 0.00 | | 7.5 to 7.9 per cent | 0.00 | 0.00 | | 7.0 to 7.4 per cent | 0.00 | 0.00 | | 6.5 to 6.9 per cent | 0.00 | 0.00 | | 6.0 to 6.4 per cent | 0.00 | 0.00 | | 5.5 to 5.9 per cent | 0.01 | 0.01 | | 5.0 to 5.4 per cent | 0.05 | 0.16 | | 4.5 to 4.9 per cent | 0.23 | 0.30 | | 4.0 to 4.4 per cent | 0.37 | 0.32 | | 3.5 to 3.9 per cent | 0.20 | 0.15 | | 3.0 to 3.4 per cent | 0.13 | 0.05 | | 2.5 to 2.9 per cent | 0.01 | 0.00 | | 2.0 to 2.4 per cent | 0.00 | 0.00 | | 1.5 to 1.9 per cent | 0.00 | 0.00 | | 1.0 to 1.4 per cent | 0.00 | 0.00 | | 0.5 to 0.9 per cent | 0.00 | 0.00 | | 0 to 0.4 per cent | 0.00 | 0.00 | | Below 0 per cent | 0.00 | 0.00 |
| Annex 8: Medium- and Long-term Forecasts of GVA Growth and Inflation | | | Annual average percentage change over the next five years | Annual average percentage change over the next ten years | | Mean | Median | Max | Min | Mean | Median | Max | Min | | Real GVA | 7.5 | 7.5 | 8.7 | 6.9 | 7.8 | 7.6 | 10.0 | 7.0 | | CPI Combined | 4.5 | 4.5 | 6.0 | 3.5 | 4.4 | 4.3 | 5.1 | 4.0 | Note: CPI: Consumer Price Index; GDP: Gross Domestic Product; GNDI: Gross National Disposable Income; GVA: Gross Value Added; IIP: Index of Industrial Production; WPI: Wholesale Price Index.
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