Nomura has revised its forecast for India’s fiscal year 2025 GDP growth to 6.7%, down from the previous estimate of 6.9%.
This adjustment follows official data indicating a slowdown in the April-June quarter, where GDP growth was 6.7%, below expectations and a decline from the 7.8% growth in the previous quarter.
Key Factors Influencing the Downgrade:
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Government Spending: A reduction in government expenditure during the national elections contributed to the economic deceleration.
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Consumer Demand: Weak urban consumption, attributed to high interest rates and moderating wage growth, has been a significant factor.
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Industrial Activity: Declines in sales of passenger vehicles and commercial vehicles suggest a slowdown in industrial activity.
Despite these challenges, the Reserve Bank of Ind a more optimistic outlook, projecting a 7.2% GDP growth for FY25.
However, some analysts share Nomura’s cautious stagrowth signals and potential downside risks to economic expansion.
In summary, while India’s economy continues to grow, recent indicators suggest a deceleration influenced by reduced government spending, subdued consumer demand, and slowing industrial activity. These factors have led Nomura to adjust its GDP growth forecast for FY25, highlighting the need for close monitoring of economic policies and market conditions in the coming months.
Sources:
https://www.reuters.com/world/india/nomura-lowers-its-fy25-gdp-forecast-india-67-2024-09-02/
