Nomura lowers its FY25 GDP forecast for India to 6.7%

Nomura lowered its FY25 economic growth forecast for India to 6.7% year-on-year from 6.9% after official data on Friday showed the country's gross domestic product (GDP) grew slower than expected on an annual basis in the April-June quarter.

India's GDP rose 6.7%, less than the 6.9% forecast by a Reuters poll and the 7.8% growth in the previous quarter, as a decline in government spending during national elections weighed.

"Overall, Q2 GDP data are weaker than expected, although the role of transitory factors like elections, versus more persistent factors like slowing profit growth is still unclear," said Nomura analysts, in a note dated Aug. 30.

A slowdown in India's economy is expected to be temporary as economists forecast that easing inflation and a pickup in government spending will shore up growth in the coming months.

However, Nomura added, "Even as government spending revives, lower corporate profit growth and a moderation in credit growth are likely to persist as growth drags."

Separately, Goldman Sachs and J.P.Morgan maintained their FY25 GDP forecast for Asia's third-largest economy at 6.5%.