Summary:

Despite a 6.7% slowdown in the first quarter of FY25, the Indian economy is expected to grow by 7% in FY25, according to HSBC Global Research. This optimistic outlook, highlighted in the study "India GDP — Buoyant Momentum, Narrowing Gaps," is supported by robust growth momentum and the closing of significant economic gaps. Gross value added (GVA) rose to 6.8% in Q1 FY25. The Reserve Bank of India forecasts a 7.2% growth, aligning with the IMF's 7% projection.

A notable development is the convergence of investment and private consumption growth after six quarters of stronger investment growth (7.5% average) compared to private consumption (3.2% average). GDP growth fell to 6.7% in Q1 FY25, down from 7.8% the previous quarter, due to decreased government capital investment and lower urban consumer confidence. Gross fixed capital formation grew by 34.8% annually. For three quarters, industrial growth has outpaced services growth, but services growth is gradually picking up, thanks to advances in trade, transportation, and public services. Normalizing temperatures are expected to boost agricultural output and rural demand.

Source: IBEF 

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