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Perspective on Q1 GDP Data for FY23 By Mr. Vivek Rathi, Director-Research, Knight Frank India

“India’s real GDP witnessed a double-digit growth of 13.5% in Q1 FY23, due to a favourable base, however, when measured sequentially, the economy contracted by 9.6% QoQ. Although domestic economic activities remained resilient to global headwinds during Q1 FY23, high level of inflation led to moderation in real GDP in the economy. In Q1 FY23, consumer inflation averaged at 7.3%. High global commodity prices along with sharp rupee depreciation led to increase import inflation leading to an overall price increase in the economy. The impact of inflation and increased import costs can be seen in a quarterly contraction in both personal as well as government consumption expenditure which contracted by 2.4% and 10.4% from Mar 2022. In the coming months, India’s economy would face headwinds primarily arising from widening trade deficit as a result of decelerating exports due to global demand slowdown. Additionally, the investments in the economy could get hindered due to tightening borrowing costs and elevates input costs.

However, we are optimistic about India’s economic outlook as the early indicators such as manufacturing PMI, GST collections etc. in the last few months have remained strong albeit global turbulences. The sustenance of strong domestic economic fundamentals is favourable for the real estate sector. So far, in the real estate sector, the residential sales have continued to remain strong despite fast rise in the borrowing costs in the last few months. We expect the momentum to continue supported by strong macro-economic fundamentals”.

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