Key View
- The acceleration in India’s real GDP growth to 7.8% y-o-y in Q2 2023 will be the peak for growth this fiscal year. A weak monsoon, tight credit conditions, and prolonged sluggishness in global demand will soon cause the economy to lose steam.
- Across the fiscal year as a whole, we continue to forecast economic growth to slow sharply from 7.2% in FY2022 to 6.3% in FY2023.
India’s real GDP growth accelerated from 6.1% y-o-y in Q1 to 7.8% in Q2, broadly in line with consensus (7.7%) but weaker than our own forecast (9.5%). While we have clearly overestimated India’s strength in Q2, we remain comfortable with our broader, lacklustre view about the economy. We continue to forecast growth of 6.3% across FY2023 (Q2 2023-Q1 2024). This is more downbeat than the Reserve Bank of India’s (RBI) forecast of 6.5%, and consistent with a slowdown taking hold over the coming quarters (see chart below).
