The Reserve Bank of India today released on its website the results of quarterly Survey of Professional Forecasters on major macroeconomic indicators of medium term economic developments. The Reserve Bank has been conducting the survey on a quarterly basis from the second quarter ended September 2007. Done through a questionnaire responded by 21 forecasters who participated in this round, the survey covered component-wise detailed forecasts of GDP growth, inflation, savings, capital formation, consumption expenditure, export, import, interest rates, money supply, credit growth, stock market movements, corporate profit, etc. The Reserve Bank will disseminate the survey results through its website on a regular basis.

The results of the survey represent views of the respondent forecasters and in no way reflect the views or forecasts of the Reserve Bank of India.

G. Raghuraj
Deputy General Manager

Press Release : 2009-2010/718

Survey of Professional Forecasters: Results of the Ninth Round (Q2:2009-10)

The Reserve Bank of India today released on its website the results of quarterly Survey of Professional Forecasters on major macroeconomic indicators of medium term economic developments. The Reserve Bank has been conducting the survey on a quarterly basis from the second quarter ended September 2007. Done through a questionnaire responded by 21 forecasters who participated in this round, the survey covered component-wise detailed forecasts of GDP growth, inflation, savings, capital formation, consumption expenditure, export, import, interest rates, money supply, credit growth, stock market movements, corporate profit, etc. The Reserve Bank will disseminate the survey results through its website on a regular basis.


The results of the survey represent views of the respondent forecasters and in no way reflect the views or forecasts of the Reserve Bank of India.

Survey of Professional Forecasters: Results of  Ninth Round (Q2:2009-10)

The 'Survey of Professional Forecasters' conducted by the Bank presents short to medium term economic developments on major macroeconomic indicators like component-wise detailed forecasts of GDP growth, inflation, savings, capital formation, consumption expenditure, export, import, interest rates, money supply, credit growth, stock market movements, corporate profit, etc. The forecasts given are the averages of data obtained from the survey. The results of the ninth round relating to the second quarter of 2009-10 are presented below. The questionnaire was sent to 40 selected forecasters, of which 21 forecasters participated in this round.

Note that the results of the survey represent views of the respondent forecasters and in no way reflect the views or forecasts of the Reserve Bank of India.

Some of the salient features are as follows:

Annual Forecasts: 

• Forecasters have revised their real GDP growth rate downwards to 6.0 per cent¹ in 2009-10 from 6.5 per cent in the last survey. The forecasters were asked to assign probabilities to the possibility that year over year real GDP growth will fall into various ranges.  The highest probability of 37.5 per cent is assigned to growth range of 6.0-6.4 per cent for the year 2009-10. For the year 2010-11, they have assigned highest probability of 49.3 per cent to 7.5-7.9 per cent growth range for GDP. The chart given below shows mean probability pattern of real GDP growth forecasts.
  
  
  
• For the year 2009-10, the forecast for agriculture has been revised downwards from 2.5 per cent to (-) 1.4 per cent. For industry, the forecasts have been revised upwards from 4.8 per cent to 6.3 per cent whereas for the services sector, there was modest downward revision from 8.3 per cent in the earlier survey to 8.1 per cent in the current survey.

• The proportion of domestic saving to GDP is indicated to be 33.6 per cent in 2009-10, revised downwards from 35.0 per cent in the last survey. Forecasters expect gross domestic capital formation to contribute 37.3 per cent of real GDP in 2009-10 (36.6 per cent in last survey), while contribution of gross fixed capital formation is expected to be 33.5 per cent (revised downwards from 35.1 per cent in the last survey). The forecasters have predicted private final consumption expenditure to grow at the rate of 7.0 per cent, which is same as in the last survey.

• The profit growth of corporate sector in 2009-10 has been revised upwards to 10.0 per cent from 7.5 per cent in the last survey. The growth in profit is expected to be 14.5 per cent in 2010-11, which has been revised marginally downwards from 15.0 per cent in the last survey.

• Broad money (M3) growth is revised upwards to 19.0 per cent in 2009-10 from the earlier forecast of 18.0 per cent. In 2009-10, bank credit is expected to grow at the rate of 17.0 per cent as against its previous forecast of 18.0 per cent. 

• Central Government fiscal deficit is placed at 7.0 per cent of GDP in 2009-10, which is revised upwards from 6.8 per cent in the last survey. The combined gross fiscal deficit is placed at 11.0 per cent of GDP, revised upwards from 10.1 per cent in the last survey.

• The forecasters expect end period repo rate and reverse repo rate to be at 5.0 per cent and 3.5 respectively in 2009-10, which are same as expected in the last survey.  

• Exports are expected to contract by 5.0 per cent in the current financial year, revised downwards from (-) 0.5 per cent in the last survey. Imports are expected to contract by 15.7 per cent in 2009-10, revised further downwards from (-) 3.5 per cent in the last survey. Net surplus under invisibles is placed at US$ 83.1 billion in 2009-10 against US$ 80.9 billion in the last survey. 

Quarterly Forecasts:

• The real GDP growth in the second quarter of 2009-10 is projected at 6.2 per cent, which is same as in the last survey. During the third and fourth quarters of current financial year, the GDP growth is placed at 5.7 and 6.7 per cent, respectively.

• Median forecasts for real GDP originating from agriculture, industry and services sectors in second quarter of 2009-10 are projected to be (-) 1.0, 6.6 and 7.8 per cent,  respectively. For agriculture sector, the forecasts have been revised downwards (2.4 per cent in the last survey). The projection for industry has been revised upwards from 3.5 per cent in the last survey. For services sector, the forecasts are revised downwards from 8.0 per cent in the last survey.

• Contribution of gross fixed capital formation to GDP has been projected at 33.4 per cent in the second quarter of current financial year, revised downwards from 34.1 per cent in the last survey. Corporate profit in the second quarter of 2009-10 is expected to grow by 4.5 per cent, revised upwards from earlier forecast of 3.0 per cent.

Forecasts on prices:

• Forecasters’ median estimates for WPI inflation in the third and fourth quarters of current financial year are at 4.0 and 6.8 per cent, respectively which have been revised upwards from 2.5 per cent and 5.4 per cent respectively in the last survey.

• The forecasters were asked to assign the probabilities to the possibility that average WPI based inflation during the current financial year and the next financial year will fall into various ranges.  Forecasters have assigned highest 34.3 per cent chance that inflation will be in the range 6.0-6.9 per cent in 2009-10 and highest 38.8 per cent chance that it will fall in 5.0-5.9 per cent in 2010-11.

Long Term Forecasts:

• Long term forecast for real GDP for the next five years is 7.5 per cent, which remains the same as in the last survey. For the next ten years, the GDP is expected to grow at 7.8 per cent, revised downwards from 8.0 per cent in the last survey (Table A.7). 

• Over the next five years, the forecasters expect WPI inflation to be 5.5 per cent, which is revised upwards from 5.3 per cent in the last survey. CPI-IW inflation has also been revised slighly upwards to 6.5 per cent in this survey from 6.0 per cent in the last survey. Over the next ten years, WPI and CPI-IW based inflation are expected to be 4.8 and 5.8 per cent, respectively (Table A.7).

¹ Growth rates wherever indicated are the median forecasts.