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Recently released JP Morgan report, predicts Indian economy to accelerate to 6.7 percent in the second half (H2) of FY24-25. Thereby, pushing the overall growth rate to 6.4 percent.
Earlier, in the July-September quarter, the country’s GDP grew by 5.4 percent. This being the slowest pace in seven quarters and far below what the market projections. Reportedly, the slowdown in the GDP growth was on account of cyclical factors and lower-than-expected performance in exports, investment, and consumption.
According to the report, the third quarter slowdown was not entirely surprising as the, economy has been cooling in recent months. The core gross value added, excluding the agriculture sector, subsidies and public administration fell sharp at 5.3%. That is, the lowest in seven quarters. Further, nominal GDP recorded its weakest performance since December 2020 and dropped to 8 percent.
However, as per the JP Morgan report, the economy is expected to rebound. The report citing factors stated, “We expect growth to average about 6.7 per cent in the second half of the fiscal year, taking full-year 2024-25 GDP growth to 6.4 per cent.” The report pointed that a sharp rise in public expenditure, growth in agriculture and reduction in crude oil price as factors contributing to firmer earnings. It also added that the normalisation of mining and electricity, coupled with reduced subsidies could benefit GDP growth.
The report further indicated that a more stable government capex plan will support growth in the upcoming quarter. Along with this, sustained rise in rural consumption, and a more favourable global climate for services export will support growth. However, the report cautioned India on issues pertaining to urban consumption and merchandise export which require careful attention in the second half of FY2024-25.