India’s Q2 GDP growth seen at 6.7% on strong services play

New Delhi: The Indian financial system possible grew 6.7% within the July-September quarter, based on a median forecast of 10 economists polled by ET, boosted by a powerful efficiency by the companies sector.

The Reserve Financial institution of India (RBI) has forecast 6.5% development within the quarter.

Strong manufacturing and building exercise additionally possible contributed to development within the second quarter, economists stated. Forecasts ranged from 6.2% to 7%. The financial system grew 7.8% within the April-June quarter and 6.2% within the July-September quarter final fiscal. “We anticipate GDP development to average sequentially to 7% within the second quarter of FY24, partly on a much less supportive base, whereas exceeding the MPC’s final estimate of 6.5%,” stated ICRA chief economist Aditi Nayar, giving the very best estimate within the survey.

The official nationwide accounts information for the second quarter of the present fiscal might be launched on the finish of November.

“The companies sector is predicted to energy development in Q2 as mirrored in sturdy companies PMI and passenger site visitors numbers whereas building and manufacturing are additionally anticipated to place up a very good present,” stated Rajani Sinha, chief economist, CareEdge, penciling in 6.5% development in Q2 of FY24.S&P International’s Providers PMI averaged 61.1 within the July-September quarter, accelerating from 60.6 within the previous three months, information launched final month confirmed, indicating companies exercise strengthened within the quarter. A PMI worth of over 50 denotes growth.

“Service sector exercise possible stayed buoyant in 2Q, in addition to manufacturing development, as signalled by stronger high-frequency prints together with PMIs, capability utilisation, credit score development, infrastructure indices and so forth,” stated Radhika Rao, senior economist, DBS.

Manufacturing exercise additionally gained tempo within the second quarter of FY24, as corporations reported higher export demand regardless of a slowdown in world development, based on outcomes of a FICCI survey launched Monday.

Increased funding by states and home consumption additionally had a job to play in driving development.

“India continues to outperform its world friends on financial development, and in Q2FY24, regardless of the a number of exterior headwinds, financial exercise was underpinned by home consumption, state funding, and buoyant shopper sentiment,” stated Rahul Bajoria, MD and head of EM Asia (ex-China) economics, Barclays.

Consultants contend that city consumption is prone to have completed higher than rural consumption, which confirmed some enchancment within the quarter.

India’s packaged shopper items grew 9% by worth and eight.6% by quantity within the September quarter from the yr earlier, aided by larger spending in rural India for each necessities and discretionary merchandise, based on researcher NielsenIQ, ET reported on November 8.

It attributed the expansion to cooling inflation, a decline in unemployment, and decrease LPG costs.

FY24 OutlookWhile economists had been extra optimistic about Q2 development than the RBI’s Financial Coverage Committee (MPC), for fiscal 2024 they’ve a decrease 6.3% development forecast in contrast with the central financial institution’s 6.5% estimate within the final evaluate on October 6.

Some have even pared their full-year estimate.

“For the complete yr (FY24), we now have lowered our GDP development projection to six.3% from 6.5% earlier because of the anticipated hit to Kharif agriculture manufacturing and its unfavorable affect on rural demand,” stated Sinha from CareEdge.

Progress in subsequent quarters would rely upon actual wage will increase and inflation dangers remaining contained, they stated.