India's GDP predicted to dip to 5%

Blame it on modest factory output.

According to DBS, 4Q GDP growth numbers will be out today and we have pencilled in another sub-5.0% print for the headline, at 4.7% YoY, slightly below consensus. An outcome closer to our estimate willtake the full-fiscal year 12/13 growth to 5.0%, down from FY11/12’s 6.2%.

Here's more:

Modest stabilisation in factory output (albeit at weak levels) primarily led by the capital and manufacturing goods production likely supported the headline. While weaker on QoQ basis, production grew 1.8% in 4Q FY12/13, up from 0.8% in the comparable year ago period.

The underperformance of the mining sector, however, remains worrying. Agricultural output likely remained stable while services moderated in line with easing demand dynamics.

Panning overto the expenditure end, a significantscaling back in government expenditure to meetthe fiscaltargets, islikely to emerge as a drag on economic activity. On the other hand,slowing WPI inflation and gradual cuts in the benchmark rateslikely anchored inflationary expectations.

However, the trend for consumption spending islikely to remain sub-par assignalled by de-growth in the auto production figures. In addition, an improved net exports position on account of 15% QoQ pick-up in merchandise shipmentsshould also help at the margin.

A much weaker than consensus headline number is likely to strengthen the case for the central bank to deliver more rate cuts, especially as inflationary pressures decelerate.

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