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India Q4 GDP data expected next week; economy likely to grow at 5.5% in Q4

The growth can be attributed to several factors, including the strong prospects for agricultural and related activities, which is expected to positively impact domestic consumption and investment.

The country’s gross domestic product (GDP) growth for the entire financial year 2022-2023 is likely to be higher than first advance estimate of 7% by NSO.Premium
The country’s gross domestic product (GDP) growth for the entire financial year 2022-2023 is likely to be higher than first advance estimate of 7% by NSO.

The Indian economy is expected to have grown 5.5% during the January-March 2023 period despite multiple global headwinds, economists said. The growth is higher than 4.4% recorded in the preceding quarter.

The country’s gross domestic product (GDP) growth for the entire financial year 2022-2023 is likely to be higher than first advance estimate of 7% by NSO.

The Reserve Bank of India (RBI) has estimated Q4FY23 real GDP growth at 5.1%. For 2023-24, RBI projects GDP growth at 6.5% with Q1 pegged at 7.6%.

This growth can be attributed to several factors, including the strong prospects for agricultural and related activities, which is expected to positively impact domestic consumption and investment. Additionally, strengthening business and consumer confidence, as well as robust credit expansion, are likely to contribute to the overall economic expansion.

Notably, domestic GDP growth comes amidst a backdrop of global economic downturn, characterized by recessionary pressures in several countries. These challenges arise from a combination of geopolitical tensions, climate-related shocks, increased debt servicing obligations due to rising interest rates, money and currency market upheavals, among others.

“Amidst this global hullabaloo, India is expected to continue its showdown in pursuing a different pathway of zeroing in on drivers of growth, looking for a renewed surge in resilient manufacturing while supporting services sector to embrace enhanced efficiency," Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India said in a report.

Ghosh projects India’s Q4 GDP growth at 5.5% and that for FY23 to be likely at 7.1%.

Also Read: German economy shrinks by 0.3% in Q1 of FY 2023, country enters recession

Meanwhile, India Inc. continues to front lead the economic turnaround while embracing better operational and financial efficiency. In Q4FY23, around 1700 listed entities reported top line growth of 12%, while net profit grew by around 19% as compared to the same period previous year. 

Green shoots are also emerging on foreign capital inflows in capital markets with foreign institutional investors (FII) YTD inflows in FY24 touching $6 billion, a reversal of trend from 2022. 

However, start-ups financing has been hit due to banking turmoil in the US, in particular failure of niche banks though it also offers a gearing up pedestal to domestic financial institutions to ring fence the financial needs of these changelings internally to ensure the sweet spot enjoyed by India grows in a disruptive and disproportionate manner, the SBI report noted.

Madhavi Arora, Lead Economist at Emkay Global Financial Services sees Q4 GDP growth at 5.1% and FY23 growth at 7%. She expects growth to slow to 5.7% in FY24.

“Growth in Q4 is expected to be driven by momentum in trade, hotel and transportation while government spending may have also picked up. There are nascent signs of consumption recovery, however it is still led by urban more than rural. Besides, net exports were less of a drag to growth amid lower trade deficit and higher services net exports," Arora said.

In the third quarter of 2022-23, India's economic growth slowed down to 4.4% amid a series of interest rate hikes by the central bank that hurt demand, while weakness in the manufacturing sector continued.

Care Ratings projects GDP growth in FY23 at 6.8% with economic growth in Q4 projected at 4.4%. 

“Growth is expected to be led by the services sector while net exports and the manufacturing sector are expected to weigh on growth. Economic growth is projected to moderate to 6.1% in FY24 amid global economic uncertainties and likely spillovers from the external sector," Care Ratings said.

The Union Budget 2023-24’s emphasis on capital expenditure is expected to crowd-in private investment, strengthen job creation and demand, and raise growth potential, analysts said.

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Updated: 26 May 2023, 10:40 AM IST
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