GDP growth to stay flat at 4.5 pc in Quarter 3 of FY20: SBI economists

''Our composite leading indicator (index of 33 major leading indicators) suggests that GDP growth will remain flat at 4.5 per cent as in Q3 of FY20,'' the Economic Research Department of State Bank of India said.

With China, in the grip of Coronavirus, immediately finding other markets for imports of these commodities is thus going to be difficult, the report said, adding that this can impact local importers and in turn consumers adversely.

The SBI economists expect the gap between GVA and GDP to widen further in FY20 as the transfer of Government payments is witnessing a slowdown in Quarter four of FY20.
''Interestingly, with the FY19 GDP growth being revised downwards steeply to 6.1 per cent in FY19 it indicates that the growth slowdown was much more significantly entrenched and had started from April 17 onwards / FY18,'' the report said.

The economists expressed worry that the impact of corona virus on India could now happen with a lag.

The outbreak is now expected to cause a growth erosion of 100 bps in China alone. New hotspots have emerged in South Korea (977 cases) and in Italy (229 cases) and these will result in more quarantines, border closures and disruptions in economic relations.

Thus the cost of death even though might be limited, the economic impact could be significantly large, the report maintained.

Although number of cases of COVID-19 in India are less, the economic impact is expected to accrue from supply chain risk which may link up with exports as in pharmaceutical sectors, it said.

More crucially, April-December 2019 data for India’s imports shows that there are 19 HS categories in which China has more than half the share of imports and these are mostly consumer goods, the SBI economists pointed out.