Perspective on GDP Data by Mr. Nikhil Gupta, Chief Economist, Motilal Oswal Financial Group
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Below the perspective on CPI Data by Mr. Nikhil Gupta, Chief Economist, Motilal Oswal Financial Group.
India's 2QFY24 real GDP growth is a picture perfect
Full-year FY24 growth to be revised up again to 6.5-6.6%
-- India's real GDP grew 7.6% YoY (yes, you read it right) in 2QFY24, much better than the BMBG consensus of 6.8% and our forecast of 6.6%. real GVA growth was 7.4%.
-- As impressive the headline number is, the details are even more impressive. Better growth was almost entirely driven by investments and fiscal spending, with private consumption growth remaining weak (much weaker than our forecast).
-- India's investment rate rose to 32.9% of GDP in 2Q, better than 32.1% of GDP in 2QFY23. Our calculations suggest that corporate investments grew 3.3% YoY last quarter, after two declines (in contrast to our expectation of a 3rd successive fall).
-- Notwithstanding higher investments, India's net imports was well behaved (at 2.4% of GDP vs. 2.3% in 1Q) because private consumption grew by only 3.1% YoY (weaker than expected and in 1Q). Consequently, it is likely that household financial savings picked up in 2QFY24.
-- Further, with better real growth, nominal GDP growthw as also 9.1%, better than 8% in 1Q (and our forecast of 8.5%).
-- One confusion from today's GDP data, however, is to match strong retail loans with weak private consumption growth.
-- Overall, India's GDP growth remains extremely strong. At 7.7% real growth in 1H, it is almost certain that the full-year growth will be revised upwards once again, probably to 6.5-6.6%.
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