India: Investment slows sharply in Q1-FY20 – Standard Chartered

Standard Chartered analysts point out that for the Indian economy, capex data for Q1-FY20 (quarter ending June 2019) indicates deterioration in most investment indicators.

Key Quotes

“A slowdown was broadly expected given that most indicators tend to slow historically in the quarter when polling for a national election takes place; however, it was much sharper in almost all segments as government-led investment and announcements dried up.”

“We expect a recovery over the next 12 months, primarily led by government investment. New government announcements, as well as project completions, fell sharply in Q1 but should recover closer to the usual run-rate by Q3.”

“The recovery in investment indicators is likely to be slow and less sharp than after the 2014 national elections, given that the current slowdown has persisted for the last six to eight quarters. This most likely pertains to the slowdown in the broader economy and challenging global environment. While the election-related slowdown will mostly reverse, we think full recovery in investment indicators is still few quarters away. We believe a meaningful recovery could be delayed until FY21 (year ending March 2021) amid global headwinds.”