India economy grows 5.4% in July-Sept quarter
2024.11.29 06:32
BENGALURU (Reuters) – India’s economy slowed much more than expected in July-September, expanding by only 5.4% year-on-year, data showed on Friday, weighed down by weak urban consumption following a rise in food prices.
A Reuters poll had predicted a 6.5% expansion in gross domestic product for the quarter ending Sept. 30.
COMMENTARY
UPASNA BHARDWAJ, CHIEF ECONOMIST KOTAK MAHINDRA BANK, MUMBAI
The sharply lower-than-expected GDP figures reflect the highly disappointing corporate earnings data. The manufacturing sector appears to have taken the maximum beating.
The high-frequency data suggests festive-linked revival in activity may provide a marginally better second-half growth but overall GDP growth for the full year is going to be around 100bps lower than RBI’s estimate of 7.2%.
Despite the sharp slowdown in GDP growth, we maintain our view of a pause by the RBI next week, given elevated inflation and uncertain global environment.
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
The softer economic growth stemmed from lower manufacturing, electricity and mining growth in the second quarter.
On the demand side, consumption growth slowed probably due to a moderation in urban demand.
While we expect the RBI to keep the policy rate unchanged at its meeting next week, the possibility of a move in February for a rate cut has increased.
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI
Amid sluggish consumption growth owing to moderating real income growth and effect of concentrated and heavy rains, demand drivers remained weak in Q2 FY25. The rise in commodity prices amid sluggish top-line growth led to drop in gross value added growth in manufacturing sector.
Both these factors impacted the growth in Q2FY25.
