Perspective On Q2 GDP data By Ms. Madhavi Arora, Emkay Global Financial Services
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Below the perspective on Q2 GDP data By Ms. Madhavi Arora, Lead Economist, Emkay Global Financial Services
"GDP reaction
The 2QFY24 GDP print at 7.6% has come closer to our forecast at 7.3%, while overshot both consensus (6.8%) and the RBI (6.5%) considerably. The buoyant growth is being underpinned by cyclical factors like robust corporate profits, a strong fiscal impulse, with government spending being front-loaded in a pre-election year, and an boisterous financial sector, led by easier lending standards and higher credit growth. The structural factors like deflator issues in growth accounting may have also augured well for the print. However, we expect GDP growth to slow in 2HFY24 . Cyclical headwinds in the form of (1) relatively slower govt spending in 2H, (2) fading benefits of lower commodity prices on YoY basis, (3) sub-par agri performance, (4) tighter lending standards and (5) weaker exports. Besides, the deflator related growth boost seen in the first half of FY24 are likely to increasingly unwind."
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