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SBI downgrades India’s GDP growth forecast to 6.3% for FY25, citing economic challenges
SBI revised India's FY25 GDP growth forecast to 6.3%, slightly below the NSO's 6.4%. The bank noted challenges including a slowdown in lending and manufacturing, with expectations for slower growth reflected in the First Advance Estimates for GDP
The State Bank of India (SBI) SBI's revised forecast for FY25 GDP growth in India is 6.3%, which is a little less than the 6.4% estimate from the National Statistical Office (NSO).
SBI identified a "downward bias" in its forecast, which cited a number of issues influencing economic growth. It stated, "GDP growth for FY25 could be around 6.3 per cent, with downward bias."
The SBI research claims that expectations for FY25 have been tempered by the slowdown in lending and manufacturing development and the effects of a large base effect. Furthermore, a more general slowdown in aggregate demand throughout the fiscal year is reflected in the First Advance Estimates (FAE) for GDP.
The study emphasised the contributions of particular sectors to GDP development. The predicted 8.5% nominal and 4.1% real growth in government consumption will assist the economy.
SBI's updated forecast reflects the difficulties India faces in maintaining rapid growth rates in the face of internal economic pressures and international concerns. The bank's study highlighted the necessity of focused actions to address manufacturing and credit growth to improve overall economic performance.
In its initial advance GDP projections, the National Statistical Office (NSO) estimated that India's real GDP growth would be 6.4% in FY25.
According to the research, private consumption has become a major force behind economic expansion, with FY25 seeing the greatest growth rate of 7.3% in real terms.
GDP growth likely to slip to 6.4% in FY25: Govt data
According to the First Advance Estimates (FAE), which offer an early look at GDP trends, FY25 will probably be a year of slower growth. Policymakers must adopt a balanced strategy to maintain momentum in important sectors while overcoming obstacles.
Meanwhile, according to government data released on Tuesday, India's economic growth rate is predicted to drop to a four-year low of 6.4% in 2024–2025, primarily due to subpar performance by the manufacturing and services sectors.
India’s GDP growth for FY25 is projected at 6.4%, in line with expectations, with a pickup in growth to 7% in the second half, surpassing the 6% growth in H1. However, investment growth has slowed to 6.4% from 9% last year, with no expected rebound in the second half, signaling weak private investment. On a positive note, private consumption is forecast to grow strongly at 7.3%, up from 4% in FY24, supported by strong agricultural growth and lower food inflation.
For FY26, GDP growth is expected at 6.7%, with a key focus on a broad-based recovery in consumption and a meaningful pickup in private investment. Monitoring external risks such as trade policy uncertainty, market volatility, and geopolitical tensions will be crucial, according to Rajani Sinha, Chief Economist at CareEdge Ratings.
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Business NewsEconomySBI downgrades India’s GDP growth forecast to 6.3% for FY25, citing economic challenges
First Published:8 Jan 2025, 09:27 AM IST
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