Recovery in sight, RBI rate cut cycle to continue: How brokerages view GDP data

India GDP Data News: Domestic economic growth stood at a lower-than-expected 6.2 per cent in the October-December period, picking up sequentially but far from the level of expansion seen in the year-ago period, according to official data released on Friday. Economists polled by Zee Business had pegged growth in the country’s GDP at 6.3 per cent in the fiscal third quarter.

Growth improved in areas like agriculture—to 5.6 per cent vs 1.5 per cent a year ago—and private consumption—to 6.9 per cent from 5.7 per cent a year ago, but worsened in spaces like mining (1.4 per cent vs 4.7 per cent a year ago), manufacturing (3.5 per cent vs 14 per cent a year ago), construction (7.0 per cent vs 10.1 per cent a year ago, and services (7.4 per cent vs 8.3 per cent a year ago), the data showed.

The central government now expects to close the financial year with GDP growth of 6.5 per cent, 10 basis points (bps) higher than its earlier estimate.

Here’s how foreign brokerages BofA Securities and Macquarie view India’s latest GDP numbers:

BofA lowers its FY25 GDP growth forecast to 6.3% from 6.5%

The brokerage lowered its FY25 GDP growth estimate to 6.3 per cent from the earlier 6.5 per cent, stating that the recovery in the December quarter appears to be shallow.

With supply-side indicators pointing to some good momemtum, the RBI’s rate-cutting cycle is expected to continue going forward, according to the brokerage.

Recovery in sight, says Macquarie

According to Macquarie, the country’s GDP growth is expected to be at 7.5-7.6 per cent, given the official full-year estimate of 6.5 per cent.

A deceleration in gross fixed capital formation (GFCF) remains a concern and a key monitorable going forward, according to the brokerage.