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Business News/ Economy / India Q1 GDP data today: This is how other major economies fared in June quarter
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India Q1 GDP data today: This is how other major economies fared in June quarter

India Q1 GDP to be released on Thursday; economists expect growth to beat RBI forecast of 8 percent. India remains one of the fastest-growing large economies in the world and is expected to witness healthy growth in the current financial year.

India's GDP likely moved up to 7.7 per cent in the April-June quarter of the current fiscal (2023-2024). (Agencies)Premium
India's GDP likely moved up to 7.7 per cent in the April-June quarter of the current fiscal (2023-2024). (Agencies)

After the US revised its Q2 GDP (gross domestic product) estimates on Wednesday (August 30), all eyes are on the India Q1 GDP numbers, scheduled to be released on Thursday (August 31).

As Mint reported earlier, the US economy expanded at a 2.1 per cent annual pace in the April-June quarter, compared to the initial estimate of 2.4 per cent, according to official revised estimates released on Wednesday.

"The US Commerce Department's second estimate of growth last quarter marked a slight acceleration from a 2 per cent annual growth rate from January through March. US government's data of the GDP — the total output of goods and services — showed that growth last quarter was driven by upticks in consumer spending and business investment," the Mint report said.

Read more: US Q2 GDP growth revised down to 2.1% annual rate from 2.4%

India remains one of the fastest-growing large economies in the world and is expected to witness healthy growth in the current financial year.

Experts say while the latest growth prints of major economies of the world show some signs of pressure, the Indian economy is shining.

Read more: Q1 GDP preview: India Q1 GDP print may beat RBI MPC forecast

GDP growth rate for other major economies 

China’s gross domestic product from the April to June quarter came at 6.3 per cent YoY while the UK's GDP increased by 0.4 per cent YoY in the same period. 

Japan's GDP expanded by 6 per cent YoY in the June quarter while Germany's adjusted GDP contracted by 0.2 per cent YoY in the same quarter.

The US economy grew by 2.1 per cent QoQ in the April-June quarter.

Recently, the International Monetary Fund (IMF) revised India’s GDP growth forecast to 6.1 per cent for 2023, up from 5.9 per cent projected by the financial institution earlier this year as a result of stronger domestic investment. The IMF projected India's growth for 2024 at 6.3 per cent.

Earlier in June, Fitch Ratings raised its FY24 (2023-24) growth forecast for the Indian economy to 6.3 per cent, from 6 per cent predicted earlier.

After the MPC meeting in August, RBI projected India's real GDP growth for FY24 at 6.5 per cent with Q1 at 8 per cent, Q2 at 6.5 per cent, Q3 at 6.0 per cent, and Q4 at 5.7 per cent.

For the financial year 2022-23, India's growth rate came in at 7.2 per cent, higher than the RBI's estimate of 7 per cent. However, the pace of growth was slower as compared to the 9.1 per cent recorded in FY22.

Read more: IMF raises India’s 2023 GDP growth forecast to 6.1%

All eyes on India Q1 GDP numbers

Investors will closely observe how the Indian economy fared in the last quarter amid all the chatter around its economic resilience.

India's GDP likely moved up to 7.7 per cent in the April-June quarter of the current fiscal (2023-2024), recording the fastest annual pace in a year, supported by healthy government capital expenditure, improved investment activity and the low base of the same quarter last year.

Barclays has projected India’s GDP to have expanded by 7.8 per cent in the April-June quarter.

“Headline growth is expected to accelerate in Q2, rising to a four-quarter high and completing the recovery in high-contact services. Domestic demand remains the key economic driver of activity, while external demand is faltering," said Rahul Bajoria, MD and Head of EM Asia (ex-China) Economics, Barclays.

However, some economists and rating agencies expect India's Q1 GDP prints to beat the 8 per cent forecast of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC).

For example, rating agency ICRA has projected the year-on-year (YoY) growth of the GDP to improve to 8.5 per cent in Q1FY24 from 6.1 per cent in Q4FY23, boosted by the supportive base of the same quarter last year, which saw the Indian economy normalising after the Covid-19 pandemic.

Dipti Deshpande, Principal Economist at CRISIL also expects the Q1 GDP number to be above the RBI MPC estimates. She expects GDP growth at 8.2 per cent on-year in Q1FY24.

Economists at SBI have pegged India’s economic growth for the June 2023 quarter at 8.3 per cent. They expect total FY24 growth to be higher at 6.5 per cent.

The inflation risk persists

The real risk is inflation which has caused the global central banks to raise rates aggressively. The decade-high levels of interest rates are expected to weigh on economic growth. Inflation still remains elevated even after over a year-long fight against it.

India's consumer price index (CPI) inflation, or retail inflation, surged sharply to a 15-month high peak of 7.44 per cent in July 2023, driven by high food and vegetable prices.

Experts express concern that food inflation can spike in India because of poor monsoon due to El Nino. High inflation can make it harder for the economy to grow.

"If the rains remain below average in the next four weeks, they could lower kharif yields and also affect the area sown under rabi crops. This would infuse caution into rural sentiment ahead of the festive season, dampening the economic growth prospects in the next two to three quarters," Aditi Nayar, Chief Economist and Head of Research and Outreach at ICRA said.

Read more: Poor monsoon can spike food inflation; can it push RBI to hike rates? Experts weigh in

Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 31 Aug 2023, 11:36 AM IST
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