ICRA estimates second-quarter GDP growth at 7%, beating the Monetary Policy Committee’s forecast of 6.5%, which said growth could slow in the second half of the fiscal year, ahead of the election, due to The effects of slowing investment spending and the need for regulation, as monetary tightening is fully reflected. A recovery in the services sector, strong public investment spending and a pick-up in consumption-oriented sectors, especially luxury consumption, supported growth in the July-September quarter , with economists placing gross domestic product (GDP) growth at 6.7-7%. . Although the growth rate slowed down compared to 7.8% growth in the first quarter (April – June), due to concerns about external demand, domestic consumption demand and services in general. will likely contribute the most to Q2 growth.
With the release of Q2 GDP data approaching, scheduled for November 30, many economists are now expecting a growth rate of nearly 7%. However, the overall growth forecast for the 2023-2024 financial year is around 6.2 to 6.7%, with growth likely to slow in the second half of the year due to input cost pressures and economic growth. economic weakness. The government and the Reserve Bank of India (RBI) both forecast a growth rate of 6.5% for the financial year 2023-24. RBI forecasts growth of 6.5% in July-September and 6.0% in October-December. Last month, RBI Governor Shaktikanta Das said the GDP growth rate in the second quarter could surprise in terms of growth.
“The underlying growth trend continues to appear strong in India, with activity supported by domestic consumption, high levels of public investment and strong growth in the utilities sectors. We expect third-quarter growth to improve in core utilities (i.e. mining and power generation), as well as manufacturing, construction and public spending. These measures will likely help mitigate the loss of momentum in financial services, as well as trade and transport. Export growth is expected to remain weak, but the overall impact of continued improvement in services exports, coupled with a decline in imports, means that the contribution of net exports to GDP is The barrier is much weaker in the third trimester (July-September) than in the third trimester. previous quarters,” Rahul Bajoria, managing director and head of EM Asia ex-China economics, Barclays said in a note. Barclays forecast 6.8% growth in July-September. Public spending – Center and states – supported the resumption of the investment cycle. “The combination of government capital expenditure and strong growth in real estate services supported the construction sector’s recovery in steel consumption and cement production,” said IDFC FIRST Bank.
IDFC FIRST Bank forecasts a growth rate of 6.7% in the second quarter. “Domestic economic activity in the second quarter was supported by strong agriculture performance, sustained dynamism in services, strong capital expenditure by the Center (49% of budget) and states ( 32% of the budget) and a strong recovery in consumer spending,” the state said. Indian Research Bank said in a note. According to the latest data from the Comptroller General of Accounts (CGA), the government spent Rs 1.16 lakh crore on capital expenditure, about 49% of the fiscal target for the entire year.
In terms of sector breakdown, services are expected to be the biggest contributor to growth, economists said, although slower growth is expected in services sectors. finance, hotels and transportation.
“Agriculture may have been a slight drag, but services grew much stronger than expected. In general, services perform better than manufacturing. Government-led investments have also been significant, although many questions remain about their sustainability. These, along with high-end consumption, appear to have contributed to the growth,” said Devendra Kumar Pant, chief economist at India Ratings and Research.
India Ratings and Research forecasts growth of 6.9% in the July-September quarter. However, concerns about global growth remain, which could weigh on export demand.
“With a sharp slowdown in major economies around the world, export competitiveness appears to be facing a temporary barrier. However, the growing commitment of global giants to gradually source components and spare parts, in addition to domestic production commitments for export, will bode well for the sector. in the near future,” the SBI report said.
Soumya Kanti Ghosh, chief economic advisor of SBI Group, said the GDP growth rate in the second quarter is estimated to reach 7%, possibly even exceeding 7%. ICRA estimates second-quarter GDP growth at 7%, beating the Monetary Policy Committee’s forecast of 6.5%, which said growth could slow in the second half of the fiscal year, ahead of the election, due to The effects of slowing investment spending and the need for regulation, as monetary tightening is fully reflected.
“Looking ahead, rainfall is uneven, narrowing the gap with commodity prices a year ago, government investment spending momentum may slow ahead of parliamentary elections, weak external demand and The cumulative impact of monetary tightening is expected to lead to lower GDP growth in 2017. H2 FY2024.
Accordingly, we maintain our GDP growth estimate for FY24 at 6.0%, lower than the MPC forecast of 6.5% for the FY,” Aditi Nayar, Chief Economist , Head of Research and Outreach, ICRA said.
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