SBI Ecowrap - GDP grows at 7.7%, but risks to growth remain

Brief highlights of the report:

GDP grew at 6.7% in FY18, in line with advance estimates, compared to 7.1% growth in FY17. GDP growth for Q4 FY18 accelerated to 7.7% (SBI:7.6%) while growth for the earlier three quarters have been nominally revised downwards (Q1: 5.6%, Q2: 6.3%, Q3: 7.0%). The Gross Value Added (GVA) at Basic Prices grew at 6.5% for FY18, which is marginally higher than the earlier estimate of 6.4%. Agriculture and Allied Activities grew at 3.4%, Industry grew by 5.5% and Service sector growth increased to 7.9% in FY18. The GFCF declined to 7.6% in real terms in FY18 from 10.1% last year. The 9.1% growth in Manufacturing GVA in Q4 was expected, due to smart growth in Corporate GVA (sum of PBIDT and Wages/Salaries) as both of these are strongly positively correlated. Corporate GVA which decelerated since Q3 FY17 rebounded in Q2 FY18 and exhibited positive growth of 16.1% in Q4 (based on the data of 1482 non-financial companies). Overall manufacturing grew by 5.7% in FY18 compared to 7.9% in FY17.