GDP records slowest increase since January–March 2023 in April–June

GDP reading: GDP growth moderated to 6.7% year on year in the first quarter of FY 2024 (April–June), down from 7.8% in January–March and marking the worst result since January–March 2023. The reading undershot market expectations.

Drivers: The deceleration was caused by a 0.2% fall in public consumption, which contrasted with the prior quarter’s 0.9% increase; legal constraints on spending ahead of recent elections likely caused the shrinkage. Elsewhere, economic activity was more robust. Household spending growth improved to 7.4% in April–June from a 4.0% expansion in January–March. Meanwhile, fixed investment growth accelerated to 7.5% in April–June, following the 6.5% increase logged in the previous quarter. On the external front, exports of goods and services growth hit an over one-year high of 8.7% in April–June, picking up from January–March’s 8.1%. Conversely, imports of goods and services growth moderated to 4.4% in April–June (January–March: +8.3% yoy), marking the weakest reading since January–March 2023.

Panelist insight: Analysts at Nomura said: “With a sub-7% GDP growth in the first quarter of the fiscal year, and a mixed start to the second, we lower our GDP growth forecast to 6.7% y-o-y in FY25 from 6.9% previously.” Goldman Sachs analysts commented: “Going forward in H2 CY24, we expect higher sequential growth in central government capex and a sustained recovery in rural consumption, and maintain our FY25 GDP forecast at 6.5% yoy.”

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