(Reuters) -India’s economy grew at a much faster pace than expected in the July-September quarter, helped by government spending and manufacturing.
Asia’s third-largest economy expanded 7.6% in the September quarter, much faster than the 6.8% forecast in a Reuters poll of economists and the Reserve Bank of India’s estimate of 6.5%.
COMMENTARY:
ADITI NAYAR, CHIEF ECONOMIST, ICRA, GURUGRAM
“We project GDP growth to moderate significantly in H2 FY2024, with continuing headwinds such as the normalising base, weak outlook for agri output and rural demand, tepid global growth, narrowing differentials in commodity prices and transmission of past monetary tightening.”
“The possible slowdown in momentum of government capex as we approach the Parliamentary Elections could constrain growth outcomes.”
“Given the higher than forecast outcome for Q2, we are revising our FY2024 growth forecast to 6.2% from 6.0%.”
SUMAN CHOWDHURY, CHIEF ECONOMIST AND HEAD – RESEARCH, ACUITE RATINGS & RESEARCH, MUMBAI
“This has been clearly driven by the acceleration in the manufacturing sector… There are three possible reasons behind the heightened performance of the sector despite the headwinds to exports – robust performance of the steel and cement sector which reflects strong infrastructure demand, lower inputs costs, and steady domestic consumption demand in sectors such as auto.”
“The data doesn’t look that good on the consumption side… This is largely due to a weakness in rural demand and it is being reinforced by the low growth in the agricultural sector.”
SUJAN HAJRA, CHIEF ECONOMIST AND EXECUTIVE DIRECTOR, ANAND RATHI SHARES AND STOCK BROKERS, MUMBAI
“On the supply side, industrial activity has been the biggest surprise, while on the demand side, investment and government final consumption have surprised pleasantly.”
“At the same time, the supply-side services sector and demand-side private final consumption performed worse than predicted. Agriculture was likewise a let-down.”
“While we expect growth to moderate in the second half of the current fiscal year, we now estimate full-year growth to be at least 20 basis points better than our previous forecast of 6.2%.”
YUVIKA SINGHAL, ECONOMIST, QUANTECO RESEARCH, NEW DELHI
“Q2 GDP warrants an upward revision to our FY24 growth estimate, now likely to look closer to 6.5%. Looking ahead, leading data point towards Q3 FY24 commencing on a positive note amidst festive and (cricket) World Cup buoyancy.”
“Compared to H1 FY24, momentum in economic activity is likely to wane in H2 amidst downside pressures from slowing external demand, urban consumption responding to higher rates and recent RBI measures to rein in uncollateralised lending along with government capex giving up some momentum to meet budgeted target.”
THAMASHI DE SILVA, ASSISTANT INDIA ECONOMIST, CAPITAL ECONOMICS, LONDON
“The strength of the data, as well as the more timely activity indicators, mean that our previous forecast for annual GDP growth (6.3%) looked a bit timid. The economy will probably grow by 7.0% this year, an overall pick up from 6.7% in 2022.”
“Looking ahead, we think the economy will slow over the coming quarters. The RBI’s decision to tighten restrictions on unsecured lending may weigh on household spending, and exports are likely to remain under pressure.”
“We expect GDP growth of around 6.3% next year, and that means India will remain one of the fastest-growing major emerging market economies.”
TERESA JOHN, LEAD ECONOMIST, NIRMAL BANG, MUMBAI
“This reading presents some upside to FY24 GDP, but growth is likely to moderate in the coming quarters as consumption growth is likely to slow post the festive season, and some slowdown in credit growth also expected.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“This could be the start of some early signs that there is a rebalancing from services to goods in the economy. The GDP print for the second quarter does pose an upside bias for our full-year forecast of 6.5%.”
“We expect the Reserve Bank of India to remain hawkish at the upcoming policy as growth continues to show strength while inflation risks linger on.”
MADHAVI ARORA, LEAD ECONOMIST, EMKAY GLOBAL, MUMBAI
“The buoyant growth is being underpinned by cyclical factors like robust corporate profits, a strong fiscal impulse, with government spending being front-loaded in a pre-election year, and a boisterous financial sector.”
“However, we expect GDP growth to slow in the second half of FY24 (due to) cyclical headwinds in the form of relatively slower government spending, fading benefits of lower commodity prices on YoY basis, sub-par agriculture performance, tighter lending standards and weaker exports.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“India’s second-quarter real GDP showed that the strength in domestic demand surfaced as a key counterweight to global uncertainties and monetary tightening, even after accounting for base effects. Government consumption, fixed-asset investments, lower input prices and inventory restocking were likely key catalysts, while private consumption missed expectations.”
“With a strong first half, full-year growth rates might be subject to an upward revision of 40-50 basis points compared to our present estimate.”
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
“The sharp upside surprise to the second-quarter GDP figures is a welcome sign, especially as it comes in the backdrop of a broad-based pickup across most non-agricultural sectors.”
“We, however, expect the second-half growth to moderate. Having said that, the full year GDP numbers have got a big fillip after today’s figures.”
(Reporting by Dimpal Gulwani, Kashish Tandon, Rama Venkat, Hritam Mukherjee, Ashish Chandra, Chris Thomas and Milounee Purohit; Editing by Varun H K and Eileen Soreng)
