MUMBAI: Moderation in post-festival growth, as indicated by various economic reports, may lead to lower-than-expected growth in the third quarter. While economic activity picked up in October, it declined in November as seen for the first time in indicators such as payments.
According to Deutsche Bank economist Koshik Das, the current high-frequency indicators point to a slowdown. “GST growth was just 7.3% year-on-year in December 2024, the fourth consecutive month of single-digit growth. Manufacturing PMI for the same period came in at 56.4 – a 12-month low.”
“Infrastructure output growth rose to 4.3 percent year-on-year in November, up from 3.7 percent in October, but remained below the 5 percent mark. Industrial output growth is expected to slow to 3.8 percent in November, though There has been a slight improvement. 3.5 percent outturn in October,” he added.
According to Das, growth momentum needs a positive shock given the slowdown, and monetary policy needs to be stepped up. “We estimate India’s real GDP growth to average 6.5% YoY in FY25 and FY26, supported by policy support. This will be lower than the economy’s potential growth rate of 7-7.5%,” he said in a report. said in a report.
A report by Motilal Oswal said that economic indicators revealed different trends in November and December 2024, indicating an uneven pace of growth. Real GDP growth for Q3 is expected to pick up slightly to 5.5%-5.7% year-on-year, significantly lower than RBI’s forecast of 6.8%, the report said.
The economic activity index to GDP – which measures overall economic output – fell for the first time in 28 months, contracting 0.8 percent year-on-year in November, according to the report. 3% growth in November 2023, the decline is attributed to a sharp contraction in foreign trade. Faster growth in imports than exports reduced GDP growth by 6.3 percentage points.
“Among several high-frequency indicators, November 25-24 was the best month for the Indian economy, but some moderation is already visible in December,” said Rahul Bajoria, economist at Bank of America Global Research.