Economists at India's largest lender, State Bank of India (SBI), have joined others in predicting a slowdown in economic growth for the June quarter, estimating that the country's real GDP will grow by 7.1 per cent.
This is a dip from the 7.8 per cent growth recorded in both the June quarter last year and the March quarter of this year.
The SBI economists, basing their forecast on 41 lead indicators, also project that the growth in gross value added (GVA) will drop to between 6.7 and 6.8 per cent, a decline attributed primarily to weaker manufacturing performance and reduced government spending due to the general elections.
According to the economists' 'Nowcasting Model,' GDP growth for Q1 FY25 is expected to be around 7.0-7.1 per cent, with GVA slightly lower at 6.7-6.8 per cent.
They also highlighted a moderation in sales growth and an increase in staffing costs for manufacturing companies, leading to a decline in profit margins, which is expected to drag down manufacturing growth.
Despite the anticipated slowdown, SBI economists have maintained their growth estimate of 7.5 per cent for the fiscal year 2024-25, higher than the Reserve Bank of India's projection of 7.2 per cent.
The report also touched on the uncertain global economic outlook, with persistent geopolitical tensions, recession fears, and financial market volatility posing risks.
However, it noted that India's South West monsoon had improved from early July, leading to a 5 per cent surplus in cumulative rainfall as of August 25, compared to a 7 per cent deficit during the same period last year.
Follow us
