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Below the Perspective on GDP Q2 expectations by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings

‘’We expect GDP growth to be 7% in Q2 following the 6.7% growth seen in Q1 FY25. Government spending that reduced in Q1 due to election related restrictions is likely to pick up in Q2. Healthy private consumption and Investment growth seen in Q1 is likely to continue in Q2. Monsoon has been healthy and that should help improve the rural consumption demand. However, high food inflation remains a dampener for consumption demand. Moreover, some of the recent high frequency indicators like GST collection, IIP, core sector, car sales are showing weakness and that is concerning.

For the full year FY25, we expect GDP growth at around 7%. We expect growth momentum to improve in H2 FY25. This is based on expectations of improvement in consumption and private investment growth. Food inflation will remain a critical factor impacting consumer sentiments and spending in the coming quarters. Sustained pick up in consumption demand and stable global economic environment will be critical factor influencing private investment in the economy. Weak demand in China and the resultant flooding of goods in the Indian market has been a dampener for domestic private investment.  While we expect export growth to improve in H2 FY25, increased geo-political uncertainties remain a concern for the external sector.”

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