Notes ban impact: GDP may slump to 5% in Dec qtr, says HSBC

January 05, 2017 18:45

India's GDP is likely to have grown at a much slower-than-expected pace of 5 per cent in the October-December period and may see a 6 per cent growth in the following quarter due to a slow down in manufacturing and services sectors post demonetisation, says an HSBC report.

According to the global financial services major, activity data across manufacturing and services as well as consumption and investment have clearly taken a hit after November 8, 2016, when the government announced scrapping old 500/1,000 rupee notes.

"We expect GDP to grow 5.0 per cent in the October- December quarter and 6.0 per cent in the January-March quarter, about 2 percentage points lower than we had expected before the demonetisation was announced," Pranjul Bhandari, Chief Economist, HSBC India said in a research note.

Post the March quarter, the economic growth is expected to normalise gradually towards the 7 per cent level, it added.

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