According to the most recent SBI Ecowrap study, the country's GDP (gross domestic product) growth is expected to be between 6.9 and 7.1% in Q2FY24. According to the study, this will significantly raise the FY24 growth rate above the RBI's prediction of 6.5 percent.
However, the report noted that concerns about global growth are still a spot of bother. US labor markets are now beginning to wilt a bit with a consistent theme emerging in the Non Farm Payroll releases this year – the headline figures have been revised lower for 8 of the 9 months.
"We believe that once US consumers exhaust their excess savings, which are still estimated to be around $1 trillion, the US economy may be headed for a slowdown that now appears to be more frontloaded beyond 2024." It should be emphasized that US elections are scheduled for November 2024, and the Democrats may not be happy with a slowing economy before the elections, so a front loaded decline appears more likely," the research added.
In terms of GDP growth details, the report stated that while Indian Inc. reported a top-line growth of 4% in Q2FY24, it saw EBITDA and PAT growth of 66% and 31%, respectively, as compared to Q2FY23, primarily due to sectors such as banks, auto, capital goods, cement, electronics, power generation, realty, FMCG, and so on. According to the research, growth suggests that business performance has been robust across the board and is mostly broad-based.
It also said that the weighted contribution of net exports to nominal GDP was positive in Q1 FY24, at 1.3%. The goods trade deficit expanded to $60 billion in Q2 FY24, while the services trade surplus increased to $40 billion, resulting in a net exports deficit of goods and services of $20 billion. This is 55% higher year on year than net exports in Q2 FY23 (deficit of $44 billion). As a result, the net exports contribution to nominal GDP is expected to be positive and increase by roughly 2% in Q2 FY24 compared to Q1 FY24.
GDP Growth Forecast
The Union Finance Ministry stated on Tuesday that the current fiscal year should end with robust growth and macroeconomic stability, as more than half of this fiscal year has seen positive economic improvements. The ministry also stated in the Monthly Economic Review for October that the downside risk will continue to be inflation, which should put both the government and the RBI on high alert.
According to ICRA, the Indian economy is expected to have risen by 7% in the second quarter of the current fiscal year, exceeding the Reserve Bank of India's rate-setting panel's forecast, according to the Economic Times.
According to ICRA's assessment, India's economic growth is expected to slow to 7.8 percent in the second quarter, down from 7.8 percent in the first. This change is due to a normalising foundation and variable monsoon patterns.
"While the YoY growth in the remaining four indicators weakened in Q2 FY2024 relative to Q1, all of them witnessed a double-digit expansion in the quarter, including the CV registrations (+13.5 per cent), cement production (+10.2 per cent), the states' capital outlay and net lending (+33.5 per cent), and the Government of India's (GoI's) capex (+26.4 per cent)," the ICRA said in its report.
