Economists at the State Bank of India on Wednesday said they see Q2 real GDP growth slowing down further to 6.5% in the September quarter of this fiscal year.
“We estimate Q2FY25 GDP growth around ~ 6.5%, data for which will be released on 29 November and expected Q3 and Q4 growth numbers could push overall yearly GDP growth closer to 7% in FY25,” they said in a report.
We track 50 leading indicators in consumption and demand, Agri, Industry, Service and other indicators which indicate a dip in Q2FY25.
“The % of indicators showing acceleration declined to 69% in Q2 FY25 vs 80% in Q2 FY24 and 78 % in Q1FY25,” it added.
Though we believe this is a temporary impasse only and the narrative might change completely in Q3FY25 onwards, they said.
High-frequency indicators indicate that aggregate demand continued to grow (albeit with a slower momentum than in the preceding quarters and painting a somewhat mixed picture).
For instance, domestic passenger vehicle sales which is an indicator of urban demand as well as other indicators of consumption and demand as diesel consumption, electricity demand and bitumen consumption have eased.
Transport and Communication indicators viz. passenger and freight traffic at airports and toll collection are showing traction, it said.
It is to be highlighted that the April-June period saw the real GDP expanding by 6.7%, the lowest in 15 quarters.
This led to a slew of analysts revising their expectations on growth to below 7% for the fiscal and some also wonder if India is in a cyclical growth slowdown.