Survey of Professional Forecasters on Macroeconomic Indicators - Results of the 65th Round

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પ્રકાશિત તારીખ ઑગસ્ટ 06, 2020

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Survey of Professional Forecasters on Macroeconomic Indicators - Results of the 65th Round

The Reserve Bank has been conducting the Survey of Professional Forecasters (SPF) since September 2007. The responses for the latest round of the survey (65th round) were received during July 6-27, 2020², wherein thirty-two panellists participated. The survey results are presented in terms of median forecasts (Annex 1-7), along with quarterly paths for key variables.

Highlights:

1. Output

Real gross domestic product (GDP) is likely to contract by 5.8 per cent in 2020-21 but it is expected to recover next year, when it is likely to grow by 7.4 per cent (Table 1).
Real private final consumption expenditure (PFCE) is likely to contract by 6.0 per cent during 2020-21 but likely to expand by 8.0 per cent during 2021-22.
Real gross fixed capital formation (GFCF) is expected to record a large decline by 9.8 per cent in 2020-21; it is projected to grow by 6.8 per cent in 2021-22.
Forecasters have assigned higher probability to real GDP growth lying between (-)6.0 to (-)5.1 per cent in 2020-21 (Chart 1). For 2021-22, highest probability has been assigned to GDP growth lying between 7.0-7.4 per cent (Chart 2).
Real gross value added (GVA) is expected to decline by 5.8 per cent in 2020-21 though the agricultural activities are projected to expand; it is likely to record 7.0 per cent growth in 2021-22 supported by improvements in industrial and services activities.

Table 1: Median Forecast of Growth in GDP, GVA and components
(in per cent)
	2020-21	2021-22
Real GDP growth rate	-5.8 (-4.3)	7.4 (+0.2)
a. Real PFCE growth rate	-6.0 (-5.5)	8.0 (+1.1)
b. Real GFCF growth rate	-9.8 (-3.4)	6.8 (+1.2)
Nominal PFCE growth rate	-2.5 (-3.5)	10.8 (+0.2)
Real GVA Growth	-5.8 (-4.1)	7.0 (+0.2)
a. Agriculture and Allied Activities	3.4 (+0.6)	3.5 (+0.5)
b. Industry	-9.7 (-4.1)	7.1 (0.0)
c. Services	-6.1 (-6.0)	8.2 (+0.3)
Gross Saving Rate [per cent of gross national disposable income] (GNDI)]	28.0 (+0.9)	28.1 (+0.9)
Gross Capital Formation (GCF) Rate [per cent of GDP at current market prices]	27.9 (-0.2)	28.4 (+0.1)
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.

Note: Tails of the distribution are not presented in the chart. Detailed probability distributions are given in Annex 6.

Inflation

Headline consumer price index (CPI) inflation is expected at 5.2 per cent in Q2:2020-21, but moderate thereafter to 3.0 per cent by Q4:2020-21 (Table 2).
CPI inflation excluding food and beverages, pan, tobacco and intoxicants and fuel and light, is expected to remain between 4.2 per cent and 4.7 per cent during 2020-21.

Table 2: Median Forecast of Quarterly Inflation
(in per cent)
	Q2:2020-21	Q3:2020-21	Q4:2020-21	Q1:2021-22
CPI Combined	5.2 (+0.3)	3.3 (+0.1)	3.0 (+0.2)	3.3
CPI Combined excluding food and beverages, pan, tobacco and intoxicants and fuel and light	4.7 (+1.2)	4.6 (+1.2)	4.2 (+1.1)	3.7
WPI All Commodities	-0.6 (-1.1)	-1.2 (-1.8)	-0.7 (-1.2)	2.5
WPI Non-food Manufactured Products	0.1 (+0.3)	0.9 (+0.2)	0.6 (-0.3)	2.0

Forecasters have assigned the highest probability to CPI inflation in the range of 5.5-5.9 per cent in Q2:2020-21; 3.5-3.9 per cent in Q3:2020-21; and 3.0-3.4 per cent in Q4:2020-21 (Chart 3).

Note: Tails of the distribution are not presented in the chart. Detailed probability distributions are given in Annex 7.

2. External Sector

Merchandise exports and imports are projected to decline by 14.6 per cent and 20.1 per cent, respectively, during 2020-21 before reverting to growth terrain in 2021-22 (Table 3).
Current account is expected to record a surplus at 0.4 per cent (of GDP at current market prices) in 2020-21 before reverting to deficit at 0.6 per cent in 2021-22.
The Indian rupee is likely to remain range bound within ₹74.10 - ₹75.00 per US dollar till Q1:2021-22 (Annex 3).

Table 3: Median Forecast of Select External Sector Variables
	2020-21	2021-22
Merchandise Exports in US $ terms (annual growth in per cent)	-14.6 (-1.1)	10.0 (+1.7)
Merchandise Imports in US $ terms (annual growth in per cent)	-20.1 (-2.4)	16.5 (+1.5)
Current Account Balance (per cent of GDP at current market prices)	0.4 (+0.9)	-0.6 (0.0)

The Reserve Bank thanks the following panellists for their participation in this round of the Survey of Professional Forecasters (SPF):

Abhishek Gupta (Bloomberg Economics); Aditi Nayar (ICRA Limited); Anagha Deodhar (ICICI Securities); Debopam Chaudhuri (Piramal Enterprises Limited); Devendra Kumar Pant (India Ratings and Research); Gaurav Kapur (IndusInd Bank Limited); Karan Mehrishi (Acuité Ratings & Research Limited); Madan Sabnavis (CARE); NCAER; Nikhil Gupta (Motilal Oswal Financial Services Ltd); Rahul Bajoria (Barclays Bank PLC); Sameer Narang (Bank of Baroda); Shailesh Kejariwal (B&K Securities India Pvt Ltd); TAC Economics; Tirthankar Patnaik (National Stock Exchange); Upasna Bhardwaj (Kotak Mahindra Bank) and YES Bank.

The Bank also acknowledges the contribution of fifteen others SPF panellists, who prefer to remain anonymous.

Annex 1: Annual Forecasts for 2020-21
	Key Macroeconomic Indicators	Annual Forecasts for 2020-21
	Key Macroeconomic Indicators	Mean	Median	Max	Min	1st quartile	3rd quartile
1	GDP at constant (2011-12) prices: Annual Growth (per cent)	-5.9	-5.8	-2.0	-10.6	-6.4	-5.0
a	Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices: Annual Growth (per cent)	-5.9	-6.0	-0.7	-10.0	-6.9	-4.8
b	Gross Fixed Capital Formation (GFCF) at constant (2011-12) prices: Annual Growth (per cent)	-10.8	-9.8	0.1	-30.0	-14.8	-6.4
2	Private Final Consumption Expenditure (PFCE) at current prices: Annual Growth (per cent)	-2.8	-2.5	0.0	-7.5	-3.3	-1.3
3	Gross Capital Formation (GCF) Rate (per cent of GDP at current market prices)	27.0	27.9	29.0	23.0	25.7	28.0
4	GVA at constant (2011-12) prices: Annual Growth (per cent)	-5.7	-5.8	-2.5	-9.7	-6.4	-4.5
a	Agriculture & Allied Activities at constant (2011-12) prices: Annual Growth (per cent)	3.4	3.4	7.5	1.0	2.6	4.0
b	Industry at constant (2011-12) prices: Annual Growth (per cent)	-9.7	-9.7	-4.0	-15.8	-11.8	-7.4
c	Services at constant (2011-12) prices: Annual Growth (per cent)	-6.4	-6.1	-2.2	-11.4	-8.0	-4.5
5	Gross Saving Rate (per cent of Gross National Disposable Income) - at current prices	28.0	28.0	31.0	25.4	27.3	28.5
6	Fiscal Deficit of Central Govt. (per cent of GDP at current market prices)	7.4	7.5	9.0	6.0	7.0	7.8
7	Combined Gross Fiscal Deficit (per cent to GDP at current market prices)	11.7	12.0	14.0	7.8	11.2	12.2
8	Bank Credit of Scheduled commercial banks: Annual Growth (per cent)	4.8	5.0	8.0	-3.0	4.0	6.3
9	Yield on 10-Year G-Sec of Central Govt. (end-period)	5.8	5.8	7.0	5.0	5.5	6.1
10	Yield on 91-day T-Bill of Central Govt. (end-period)	3.4	3.4	4.0	2.8	3.1	3.7
11	Merchandise Exports (BoP basis in US$ terms): Annual Growth (per cent)	-15.3	-14.6	-4.4	-30.1	-17.3	-12.0
12	Merchandise Imports (BoP basis in US$ terms): Annual Growth (per cent)	-20.7	-20.1	-7.3	-31.0	-24.8	-18.8
13	Current Account Balance in US$ bn.	9.9	9.7	72.4	-30.0	-0.4	18.1
14	Current Account Balance (per cent to GDP at current market prices)	0.5	0.4	3.0	-1.1	0.0	0.8
15	Overall BoP in US$ bn.	58.6	59.0	97.0	19.0	51.2	64.9
16	Inflation based on CPI Combined: Headline	4.5	4.4	7.0	3.0	4.0	4.8
17	Inflation based on CPI Combined: excluding Food and Beverages, Pan, Tobacco and Intoxicants and Fuel and Light	4.2	4.5	5.5	2.5	3.7	4.8
18	Inflation based on WPI: All Commodities	-0.2	-0.8	3.0	-2.2	-1.5	1.2
19	Inflation based on WPI: Non-food Manufactured Products	-0.2	0.1	1.6	-4.0	-0.2	0.4

Annex 2: Annual Forecasts for 2021-22
	Key Macroeconomic Indicators	Annual Forecasts for 2021-22
	Key Macroeconomic Indicators	Mean	Median	Max	Min	1st quartile	3rd quartile
1	GDP at constant (2011-12) prices: Annual Growth (per cent)	7.5	7.4	12.7	4.0	6.3	7.9
a	Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices: Annual Growth (per cent)	7.9	8.0	12.6	4.0	6.5	8.9
b	Gross Fixed Capital Formation (GFCF) at constant (2011-12) prices: Annual Growth (per cent)	7.7	6.8	20.0	3.0	5.2	8.5
2	Private Final Consumption Expenditure (PFCE) at current prices: Annual Growth (per cent)	11.0	10.8	16.1	4.4	9.7	13.2
3	Gross Capital Formation (GCF) Rate (per cent of GDP at current market prices)	28.3	28.4	32.0	25.0	27.0	29.5
4	GVA at constant (2011-12) prices: Annual Growth (per cent)	7.2	7.0	10.5	4.5	6.1	7.7
a	Agriculture & Allied Activities at constant (2011-12) prices: Annual Growth (per cent)	3.5	3.5	5.0	2.0	3.0	4.0
b	Industry at constant (2011-12) prices: Annual Growth (per cent)	7.4	7.1	12.6	1.0	5.6	9.4
c	Services at constant (2011-12) prices: Annual Growth (per cent)	8.4	8.2	12.0	6.7	7.3	9.0
5	Gross Saving Rate (per cent of Gross National Disposable Income) - at current prices	28.2	28.1	31.5	25.0	26.7	30.1
6	Fiscal Deficit of Central Govt. (per cent of GDP at current market prices)	5.4	5.4	6.6	3.6	5.0	6.0
7	Combined Gross Fiscal Deficit (per cent to GDP at current market prices)	9.0	9.0	11.1	7.0	8.0	10.0
8	Bank Credit of Scheduled commercial banks: Annual Growth (per cent)	9.1	9.5	12.0	5.0	8.0	10.0
9	Yield on 10-Year G-Sec of Central Govt. (end-period)	6.2	6.2	7.5	4.5	6.0	6.5
10	Yield on 91-day T-Bill of Central Govt. (end-period)	4.0	4.0	5.1	2.8	3.4	4.6
11	Merchandise Exports (BoP basis in US$ terms): Annual Growth (per cent)	12.6	10.0	30.8	-2.9	7.3	15.9
12	Merchandise Imports (BoP basis in US$ terms): Annual Growth (per cent)	17.9	16.5	41.0	-5.3	13.0	25.2
13	Current Account Balance in US$ bn.	-23.6	-19.2	-6.6	-65.4	-30.2	-10.1
14	Current Account Balance (per cent to GDP at current market prices)	-0.8	-0.6	-0.2	-2.3	-1.0	-0.5
15	Overall BoP in US$ bn.	43.7	52.7	57.5	20.0	32.2	55.4
16	Inflation based on CPI Combined: Headline	4.1	4.0	6.0	3.2	3.9	4.1
17	Inflation based on CPI Combined: excluding Food and Beverages, Pan, Tobacco and Intoxicants and Fuel and Light	3.8	4.0	4.7	2.6	3.5	4.2
18	Inflation based on WPI: All Commodities	2.4	2.4	3.5	1.3	1.9	3.0
19	Inflation based on WPI: Non-food Manufactured Products	1.9	2.0	4.0	0.1	1.1	2.3

Annex 3: Quarterly Forecasts from Q1:2020-21 to Q1:2021-22
	Key Macroeconomic Indicators	Quarterly Forecasts
		Q1: 2020-21				Q2: 2020-21				Q3: 2020-21
		Mean	Median	Max	Min	Mean	Median	Max	Min	Mean	Median	Max	Min
1	GDP at constant (2011-12) prices: Annual Growth (per cent)	-22.8	-21.5	-12.0	-38.0	-5.4	-5.0	3.0	-12.4	0.6	0.4	6.8	-4.0
a	PFCE at constant (2011-12) prices: Y-o-Y Growth (per cent)	-23.2	-21.7	-11.5	-35.0	-5.2	-5.2	4.0	-12.8	1.4	2.8	5.5	-3.1
b	GFCF at constant (2011-12) prices: Y-o-Y Growth (per cent)	-31.5	-29.0	-9.6	-55.7	-11.4	-10.0	-2.0	-26.5	-1.5	1.8	9.6	-12.2
2	PFCE at current prices: Y-on-Y Growth (per cent)	-15.9	-13.4	-4.3	-32.2	-1.7	-1.4	3.5	-9.5	3.7	5.3	7.8	-1.8
3	GFCF Rate (per cent of GDP at current market prices)	24.1	23.1	32.5	19.2	24.8	25.5	29.0	20.8	25.8	26.1	29.0	22.3
4	GVA at constant (2011-12) prices: Annual Growth (per cent)	-23.4	-22.4	-13.7	-38.0	-5.2	-4.7	1.2	-12.6	1.5	1.5	7.5	-2.9
a	Agriculture & Allied Activities (growth rate in per cent)	2.4	1.9	4.9	0.0	3.5	3.0	9.0	1.9	4.0	3.5	12.0	1.9
b	Industry (growth rate in per cent)	-34.7	-35.4	-23.9	-52.0	-9.1	-8.3	3.1	-19.0	-0.4	1.4	5.7	-11.4
c	Services (growth rate in per cent)	-24.1	-25.5	-8.8	-43.3	-5.9	-5.3	0.3	-13.2	1.6	1.5	7.0	-5.7
5	IIP (2011-12=100): Quarterly Average Growth (per cent)	-38.5	-37.9	-35.0	-42.1	-9.0	-8.0	-0.9	-23.5	-0.2	2.0	8.4	-22.3
6	Merchandise Exports - BoP basis (in US$ bn.)	49.7	51.3	52.9	38.5	66.7	68.3	80.5	48.1	73.0	72.8	80.2	60.1
7	Merchandise Imports - BoP basis (in US$ bn.)	62.4	63.2	71.2	46.3	88.9	94.2	101.5	57.9	102.0	106.2	119.3	72.4
8	Rupee per US $ Exchange rate (end-period)	-	-	-	-	75.1	75.0	78.0	73.5	74.8	75.0	77.0	73.6
9	Crude Oil (Indian basket) price (US $ per barrel) (end-period)	-	-	-	-	39.0	40.0	48.0	28.0	43.4	45.0	48.0	35.0
10	Policy Repo Rate (end-period)	-	-	-	-	3.75	3.75	4.00	3.50	3.64	3.50	4.40	3.25

	Key Macroeconomic Indicators	Quarterly Forecasts
		Q4: 2020-21				Q1: 2021-22
		Mean	Median	Max	Min	Mean	Median	Max	Min
1	GDP at constant (2011-12) prices: Annual Growth (per cent)	2.5	2.9	6.9	-3.5	17.9	16.0	37.2	5.4
a	Private Final Consumption Expenditure (PFCE) at constant (2011-12) prices: Annual Growth (per cent)	3.7	4.3	9.0	-0.8	19.9	17.0	56.0	5.6
b	Gross Fixed Capital Formation (GFCF) at constant (2011-12) prices: Annual Growth (per cent)	2.5	5.0	14.1	-12.3	22.5	18.1	73.9	4.5
2	Private Final Consumption Expenditure (PFCE) at current prices: Annual Growth (per cent)	6.9	6.8	11.9	1.9	17.9	16.6	51.5	-12.8
3	Gross Fixed Capital Formation (GFCF) Rate (per cent of GDP at current market prices)	25.8	26.0	29.0	21.4	29.1	27.7	43.2	20.2
4	GVA at constant (2011-12) prices: Annual Growth (per cent)	3.5	4.2	8.0	-1.5	16.4	13.9	36.3	5.2
a	Agriculture & Allied Activities at constant (2011-12) prices: Annual Growth (per cent)	3.5	3.2	13.0	-0.8	3.2	3.3	4.0	1.8
b	Industry at constant (2011-12) prices: Annual Growth (per cent)	2.7	3.5	11.0	-9.7	19.6	17.5	59.2	4.5
c	Services at constant (2011-12) prices: Annual Growth (per cent)	4.2	3.9	11.7	-3.1	17.6	15.4	39.1	6.1
5	IIP (2011-12=100): Quarterly Average Growth (per cent)	4.1	3.5	28.2	-22.0	24.7	18.4	58.2	-20.0
6	Merchandise Exports - BoP basis (in US$ bn.)	77.9	78.9	86.6	70.5	73.1	74.1	86.1	52.9
7	Merchandise Imports - BoP basis (in US$ bn.)	109.0	108.6	125.0	92.4	103.4	102.3	121.2	84.0
8	Rupee per US $ Exchange rate (end-period)	74.2	74.5	77.0	69.0	73.9	74.1	76.5	70.5
9	Crude Oil (Indian basket) price (US $ per barrel) (end-period)	46.2	45.0	55.0	39.0	48.5	47.5	55.0	40.0
10	Policy Repo Rate (end-period)	3.61	3.50	4.40	3.00	3.70	3.50	5.00	3.00

Annex 4: Forecasts of CPI Combined Inflation
(per cent)
	CPI Combined (General)				CPI Combined excluding Food and Beverages, Pan, Tobacco and Intoxicants and Fuel and Light
	Mean	Median	Max	Min	Mean	Median	Max	Min
Q2:2020-21	4.9	5.2	5.8	2.5	4.5	4.7	7.0	2.3
Q3:2020-21	3.4	3.3	4.5	2.5	4.5	4.6	7.0	2.4
Q4:2020-21	3.0	3.0	4.0	2.3	4.2	4.2	7.0	2.1
Q1:2021-22	3.3	3.3	4.5	2.0	3.8	3.7	6.0	2.5

Annex 5: Forecasts of WPI Inflation
(per cent)
	WPI All Commodities				WPI Non-food Manufactured Products
	Mean	Median	Max	Min	Mean	Median	Max	Min
Q2:2020-21	-0.6	-0.6	1.5	-2.0	0.1	0.1	1.7	-2.7
Q3:2020-21	-0.6	-1.2	2.8	-2.3	1.0	0.9	2.9	-0.5
Q4:2020-21	-0.2	-0.7	5.3	-2.1	0.6	0.6	2.6	-2.0
Q1:2021-22	2.8	2.5	5.8	1.2	1.6	2.0	2.8	0.2

Annex 6: Mean probabilities attached to possible outcomes of Real GDP growth
Growth Range	Forecasts for 2020-21	Forecasts for 2021-22
10.0 per cent or more	0.00	0.03
9.5 to 9.9 per cent	0.00	0.02
9.0 to 9.4 per cent	0.00	0.02
8.5 to 8.9 per cent	0.00	0.04
8.0 to 8.4 per cent	0.00	0.09
7.5 to 7.9 per cent	0.00	0.18
7.0 to 7.4 per cent	0.00	0.23
6.5 to 6.9 per cent	0.00	0.12
6.0 to 6.4 per cent	0.00	0.10
5.5 to 5.9 per cent	0.00	0.09
5.0 to 5.4 per cent	0.00	0.05
4.5 to 4.9 per cent	0.00	0.02
4.0 to 4.4 per cent	0.00	0.01
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
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
0.0 to 0.4 per cent	0.00	0.00
-0.5 to -0.1 per cent	0.00	0.00
-1.0 to -0.6 per cent	0.00	0.00
-1.5 to -1.1 per cent	0.00	0.00
-2.0 to -1.6 per cent	0.03	0.00
-2.5 to -2.1 per cent	0.01	0.00
-3.0 to -2.6 per cent	0.01	0.00
-3.5 to -3.1 per cent	0.02	0.00
-4.0 to -3.6 per cent	0.06	0.00
-4.5 to -4.1 per cent	0.09	0.00
-5.0 to -4.6 per cent	0.12	0.00
-5.5 to -5.1 per cent	0.15	0.00
-6.0 to -5.6 per cent	0.14	0.00
-6.5 to -6.1 per cent	0.13	0.00
-7.0 to -6.6 per cent	0.06	0.00
-7.5 to -7.1 per cent	0.03	0.00
-8.0 to -7.6 per cent	0.08	0.00
below -8.0 per cent	0.08	0.00

Annex 7: Mean probabilities attached to possible outcomes of CPI (Combined) inflation
Inflation Range	Forecasts for Q2:2020-21	Forecasts for Q3:2020-21	Forecasts for Q4:2020-21
8.0 per cent or above	0.00	0.00	0.00
7.5 to 7.9 per cent	0.01	0.01	0.00
7.0 to 7.4 per cent	0.03	0.02	0.02
6.5 to 6.9 per cent	0.02	0.01	0.01
6.0 to 6.4 per cent	0.08	0.01	0.02
5.5 to 5.9 per cent	0.33	0.01	0.02
5.0 to 5.4 per cent	0.24	0.04	0.04
4.5 to 4.9 per cent	0.15	0.06	0.03
4.0 to 4.4 per cent	0.07	0.12	0.06
3.5 to 3.9 per cent	0.05	0.25	0.16
3.0 to 3.4 per cent	0.01	0.21	0.28
2.5 to 2.9 per cent	0.00	0.18	0.24
2.0 to 2.4 per cent	0.00	0.04	0.10
1.5 to 1.9 per cent	0.00	0.01	0.02
1.0 to 1.4 per cent	0.00	0.01	0.00
0.5 to 0.9 per cent	0.00	0.01	0.00
0 to 0.4 per cent	0.00	0.01	0.00
-0.5 to -0.1 per cent	0.00	0.00	0.00
-1.0 to -0.6 per cent	0.00	0.00	0.00
Below -1.0 per cent	0.00	0.00	0.00
Note: CPI: Consumer Price Index; GDP: Gross Domestic Products; GNDI: Gross National Disposable Income; GVA: Gross Value Added; IIP: Index of Industrial Production; WPI: Wholesale Price Index.