The economy probably slowed by 80 to 100 basis points (bps) in the second quarter of the current fiscal year, economists said on Tuesday ahead of second quarter GDP data to be released on November 30. Analysts said the Indian economy contracted 6.8 to 7 per cent on a year-on-year (YoY) basis in Q2FY24 as the utilities, services and construction sectors showed strong growth led by strong domestic demand, while External demand remained weak.
According to PTI report, domestic rating agency ICRA has issued a note keeping the GDP growth rate at 7 percent, while British brokerage firm Barclays has estimated it to be 6.8 percent. Rahul Bajoria of Barclays said, “We estimate GDP growth at 6.8 per cent year-on-year in Q2FY24, slower than 7.8 per cent in Q2FY23, but still strong sequential growth.” Is showing. Underlying growth trends look strong based on domestic consumption, high levels of state-led capital expenditure and strong growth in utility sectors.
The analyst said he expects growth to be dominated by basic utility sectors such as mining, power generation, manufacturing, construction and public spending.
“These will likely help mitigate the loss of speed in financial services and trade and transportation. Although export growth is likely to remain weak, the overall effect of continued improvement in services exports combined with lower imports suggests that the contribution of net exports to GDP was much lower in Q3 than in previous quarters. Bajoria said.
Bajoria projected a full-year GDP growth outlook of 6.3 percent, and noted risks emerging from strong consumption demand. He said credit growth, electricity consumption and mobility indicators together represent economic resilience. “We believe the domestic economy will continue to drive growth,” he said.
The analyst credited domestic demand as being the key driver of the economy and said services were contributing most to growth, even though financial services saw slower growth. He further said that services growth in the second quarter will probably slow, but still remain strong at 7.7 percent. He also predicted that industrial growth would accelerate during this period.
ICRA Chief Economist Aditi Nair said that she estimates that the growth rate in the second quarter will be 7 percent, which will be the growth rate of service sector at 8.2 percent, growth rate of agriculture sector at 3.5 percent and growth rate of industry sector at 6.6 percent. He said GDP growth is expected to decline sequentially to 7 per cent in Q2FY24 due to normal base and irregular monsoon, which was 7.8 per cent in the previous quarter.
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