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Strong private consumption and fixed investment led to in-line GDP growth in Q2 FY23 despite big drag from net exports. India remains a bright spot for the world. Signs of recovery of rural demand and resilience of fixed investment and services offer hope

In line with expectation. The 6.3% GDP growth in Q2 FY23 marked a big drop over the last quarter. Yet, given the sharply asymmetric base, the drop was expected and growth during the quarter was in line with expectation.

Robust private consumption, fixed investment growth. Both were slightly ahead of expectations. Yet, all other components including government consumption and inventory changes contracted. The main drag came from hugely negative net exports

Manufacturing dragged growth, agriculture, services delivered. Soft global demand lead to contraction of more externally-oriented manufacturing sector. Resilience of agriculture and services helped clocking respectable growth.

India likely to be the fastest-growing major economy. Despite slowdown in Q2 FY23 versus Q1 FY23, India remains top-3 rank among the G-20 economies in terms of GDP growth. The IMF expects India to be fastest growing major economy in 2022 and 2023.

Expect ~7% growth in FY23 and 6-6.5% in FY24. Expect modest recovery in industry and resilience of services

Near 10% growth in both private consumption and fixed investment offer hope in a bleak global backdrop. High negative contribution from net exports dragged GDP growth down

Support from fixed investment, private consumption. In Q2 FY23, close to 10% growth in both private consumption and fixed investment led to respectable growth despite the base being modesty unfavourable as in the same quarter last year, the economy rebound from the second wave of the pandemic.

All other components were drag on growth. Government consumption, inventory change and valuables contracted pulling down the overall GDP modestly. The large net exports was the biggest drag. But for the favourable adjustment factor (discrepancies), GDP growth would have been far more disappointing.

Key components offer hope. While the prevailing macro backdrop is not encouraging, strong growth in both private consumption and fixed investment offer hope.

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