RBI recently released the results of the latest surveys of consumer confidence, inflation expectations, and professional growth forecasts. The results generally show that consumer confidence is sustained at high levels, with respondents fairly optimistic about the prospects in the year forward period; inflationary expectations are stable and the growth momentum of FY24 is likely to be sustained in FY24 also.
Some key highlights of the surveys could be noted as follows:
Consumer confidence stable
· Consumer confidence for the current period is stable; the current situation index (CSI) remained unchanged from the previous round.
· Higher pessimism on the current general economic situation and employment was counterbalanced by a positive turnaround in sentiment on current income.
· Respondents were fairly optimistic about the year ahead prospects for the general economic situation, employment, income, and spending; even though the future expectations index (FEI) moderated marginally from the previous survey period.
· Households’ assessment of current earnings reached its highest level since July 2019 and expectations for future income also improved further.
Household inflation expectation
· Households’ perception on current inflation declined by 20 basis points (bps) from the previous survey round.
· Median inflation expectation remained stable for the three months ahead period at 9.1 per cent, but it increased for one year horizon by 20 bps to 10.1 per cent in November 2023.
· Larger share of households expects higher inflation for both three months and one year ahead periods.
· Households expect some rise in price and inflationary pressures across major product groups for the year ahead.
Professional Growth forecasts
· Median real GDP growth forecast for 2023-24 has been revised up by 20 basis points (bps) to 6.4 per cent; it is expected to grow by 6.3 per cent in 2024-25.
(In a follow up survey conducted in first week of December, after release of official growth data for 2QFY24, real GDP growth for 2023-24 has been revised up by 40 bps relative to the regular survey in November 2023, whereas the forecast for 2024-25 remained unchanged.)
· Forecasters have assigned highest probability to real GDP growth in the wider range 6.0-6.9 per cent for 2023-24 and 6.0-6.4 per cent for 2024-25.
· Annual growth in real private final consumption expenditure (PFCE) and real gross fixed capital formation (GFCF) for 2023-24 are expected at 6.0 per cent and 7.5 per cent, respectively.
· Merchandise exports and imports are projected to decline by (-)7.1 per cent and (-)5.4 per cent, respectively, in US dollar terms during 2023-24 and are expected to grow by 5.0 per cent and 6.2 per cent, respectively, during 2024-25.
· Current account deficit (CAD) is expected at 1.7 per cent (of GDP at current market prices) during 2023-24 and likely to improve marginally to 1.6 per cent during 2024-25.
Overall, the macroeconomic conditions are expected to remain stable with the current growth momentum sustaining. No significant acceleration is likely in GDP growth, consumption or investments.
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