The graph for GDP quarterly series (Graph 1) shows the recovery complete. It further shows that there are 3 major AO (additive outliers) in this series. These AOs are like one off injuries to the economy caused by the negative shocks generated from the pandemic and its peripheral factors. Such injuries generally creates permanent damage to a few segments of the economy or even can cause short and medium term nudges to its overall trend-cyclical flow, its seasonal pattern, etc.
Therefore we have to assess the strength of economic recovery by adjusting the quarterly GDP series for these AOs. There are established econometrics techniques used by seasonal package in R to do this adjustment with reasonable accuracy.
The outlier adjusted GDP growth graph (Graph 2) indicates a trend reversal. The consistently increasing economic growth implies the resilience of the economy to various adverse impacts during 2022-23 like sharp rise in global commodity prices and its first leg impact on domestic inflation, tightening of global liquidity, volatility in the forex market, substantial withdrawal by FIIs during the year,etc.
The pace of recovery has been gradual so far. While the pickup in domestic absorption (Refer to my previous post: [Click Here]) has strongly supported the overall economic recovery, the support from external demand has been muted.
Recently the IMF has revised up the global GDP forecast for 2023. It expects the global GDP growth will be better than its earlier forecast. If such positive surprises keep coming from the external front and the geopolitical tension pacifies in coming quarters then we may witness a faster recovery in Indian economic growth.
The pace of recovery has been gradual so far. While the pickup in domestic absorption (Refer to my previous post: [Click Here]) has strongly supported the overall economic recovery, the support from external demand has been muted.
Recently the IMF has revised up the global GDP forecast for 2023. It expects the global GDP growth will be better than its earlier forecast. If such positive surprises keep coming from the external front and the geopolitical tension pacifies in coming quarters then we may witness a faster recovery in Indian economic growth.