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Below the Perspective on GDP Data for Q2 (July-Sept) 24-25 by Mr. Vivek Rathi, National Director- Research, Knight Frank India

“India's GDP growth decelerated to a seven-quarter low during Q2 FY'25, primarily due to a slowdown in consumption, investments, and exports. GCF moderated to 5.9% during Q2 FY'25 potentially due to investors sentiment influenced by the key elections. Additionally, subdued export growth, driven by a global demand slowdown, further contributed to the reduced GDP growth during the quarter.

Sectoral, the manufacturing sector experienced a sharp moderation of 2.2% in Q2, highlighting the weakening consumer demand within the economy. The construction sector grew by 7.7%, the slowest growth observed in recent quarters. This slowdown can be attributed to a moderation in infrastructure spending and project uptake due to the elections, with potential for revival in the coming months.

However, real estate demand has remained stable, as indicated by high-frequency indicators. Both buyer appetite and developer sentiment towards the real estate market continue to be steady.

Looking ahead, the seasonal impact of the festive quarter may boost consumption during Q3 FY'25. However, early indicators suggest a potential slowdown in consumption, which is concerning. Despite this, it may not necessarily lead to a rate cut by the RBI, as upside risks to inflation persist. Consequently, the combination of slowing consumption and persistent inflation is likely to present a dilemma for the RBI in the MPC meeting.”

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