Real GDP expanded by 6.7% y-o-y (BMI estimate: 6.7%, Reuters poll: 6.9%) in the first quarter of FY2024/25(April-March), slowing from 7.8% y-o-y in the previous quarter and marking the slowest growth since Q4FY2023/24.
Key View
- GDP grew at a much slower 6.7% y-o-y in Q1FY2024/25 in line with our estimate, but that was largely due to a large drag from statistical discrepancies.
- Private consumption mounted a strong comeback as we predicted and we think this has further to run.
- While tight monetary policy and contractionary fiscal policy are key drags, we think strong consumer and external demand will push growth to the 7.0% we are forecasting for FY2024/25.
India’s economy has shown remarkable resilience, staying on course for a growth rate of around 7% despite a slowdown in the first quarter of the year. Recent reports indicate that various sectors such as manufacturing, services, and agriculture are stabilizing, bolstered by government initiatives and infrastructure spending. Analysts suggest that this optimistic outlook is supported by an uptick in domestic consumption, which plays a critical role in sustaining economic momentum.
The first quarter’s slowdown can be attributed to external factors, including global uncertainties and inflationary pressures. However, the long-term fundamentals remain strong as India continues to attract foreign investments and foster innovation. Additionally, government measures aimed at enhancing ease of doing business and promoting startups are expected to catalyze growth in the coming months.
As the monsoon season approaches, agricultural productivity is anticipated to rise, further contributing to economic stability. With a young and dynamic workforce and an expanding digital landscape, India is well-positioned to achieve its ambitious 7% growth target, showcasing its potential to emerge as a global economic powerhouse.
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