Key View
- The economy grew by 8.4% y-o-y in Q4 2023 according to expenditure data but production data show a 6.5% rise in GDP instead.
- We are therefore not convinced that activity picked up and are sticking to our narrative that the economy is set to slow over the coming quarters.
- Prolonged Red Sea disruptions are a key downside risk to our projections.
Real GDP data for Q4 2023, or Q3 FY2023/24 (April – March), surprised significantly to the upside with an 8.4% y-o-y expansion (BMI: 6.3%, Reserve Bank of India: 6.5%, Consensus: 6.7%). That was mostly due to the unusually large statistical discrepancy. Production data show output grew by 6.5% instead and we are more inclined to go with that. Nonetheless, the strong official GDP numbers mean that the government is on track to report full year GDP growth of 7.0% for FY2023/24, compared with our previous 6.5% forecast (see chart below). We have also notched down our FY2024/25 GDP growth forecast from 6.7% to 6.5% to account for the stronger base FY2023/24 is now likely to present.
