NEW DELHI: Ahead of the release of official GDP numbers for the second quarter of FY25, economic analysts present varied estimates ranging from 6.2% to 6.9%. The outlook reflects contrasting indicators from various sectors of the economy, highlighting both structural challenges and potential growth drivers.
The Q2 GDP numbers will be announced on Friday by the Ministry of Statistics and Programme Implementation. ICRA has projected GDP growth to dip to 6.5% in Q2 from 6.7% in Q1FY25. It attributes the drop to heavy rains and weak margins offsetting buoyancy injected by turnaround in government capex and healthy trends in kharif sowing.
“Several sectors (in Q2) faced headwinds on account of rainfall, which affected mining activity, electricity demand and retail footfalls and a fall in goods exports. Margins appear to have weakened for corporates in various sectors in Q2. As a result, we project slight dip in India’s GVA and GDP growth in Q2FY25 to 6.6% and 6.5%, respectively,” says Aditi Nayar, chief economist, head-research & outreach, ICRA.
DK Srivastava from EY raises concerns about CPI inflation rate, which stood at 6.2% in October, alongside an expected lower GDP growth of 6.5% for Q2. He said, “Main reason for growth slowdown is contraction in government’s capex at (-)15.4% during April-September 2024.”
Srivastava advocates for a prioritisation of fiscal policy actions, stating, “Accelerated government investment expenditure should be given the highest priority while monetary policy action may be delayed beyond December 2024.”
Gaura Sen Gupta, chief economist, IDFC First Bank, pegs Q2 GDP growth at 6.2% due to moderation in manufacturing sector growth.
“Listed companies results show fall in profit in Q2 with slowdown in revenue. Urban demand weakness persists with softer FMCG sales growth, consumer goods production and fall in passenger vehicle sales,” she added. Madhavi Arora, chief economist at Emkay Global, suggests Q2 GDP may come in at 6.3%.
She stated, “Urban wage bill growth has been declining on real basis for over one-and-a-half years and currently is well below five-year pre-COVID average of 9%. The fall in income capacity of urban sector has hit consumption profile, albeit with a lag.”
Madan Sabnavis, chief economist with Bank of Baroda, projects GDP growth of 6.8% to 6.9% for Q2FY25, buoyed by strong performance in the services sector.