IGI Logo

Below a perspective on Q1 GDP Data for FY24 by Mr. Vivek Rathi, Director - Research, Knight Frank India.

“Q1 FY 2023-24 GDP growth rate of 7.8% was led by growth of domestic consumption and investment activity in the economy, stabilising the potential slowdown due to receding global demand. Private consumption expenditure which comprises majority weight in the GDP estimates grew by 6%. Domestic investments as well has indicated some strength, as seen in 7% growth in GCF. Growth in investments is crucial for revival of CapEx cycle in the economy which in turn is supportive of long-term growth. Additionally, a strong revival in the services sector which comprises 53% of the total economic output spurred economic growth in Q1 FY24.

Although, there has been a weakness in the external demand as witnessed by contraction in exports, the domestic consumption and investment activities largely supported growth in Q1 FY24. The real estate sector has been both, a major beneficiary, and a contributor to the strong economic momentum during this period. This underlying strength has also ensured that housing and commercial real estate segments in India have shown resilience and continued to grow in the latest period, even as they reflect pressure on sales and property price globally. The country’s real estate sector has a potential to become a USD 5.8 trillion industry in the next 25 years and this implies a faster growth than the baseline for the economy. As this unfolds the property sector will double its share in the economy from 7.5% currently to 15.5% in 2047. In the near term, we reckon that increased home loan interest rate and property price has dampened demand in the affordable segment, however, improving economic growth condition will also benefit this segment even as we wait for the interest rate cycle to turn next year to serve as a catalyst for this mortgage dependent consumer group”.

Above views are of the author and not of the website kindly read disclaimer