Q3 growth likely to hit 7%

India’s GDP is expected to pick up in the third quarter (Q3) of FY18 indicating turnaround in the economic growth.

DBS Economics said it expects that a rebound in real GDP growth to 7 per cent in Q3 from Q2’s 6.3 per cent. “Lead indicators have been encouraging, with urban consumption recovering into the year-end, whilst rural consumption moderated. PMIs recovered from the post-GST lull, along with a jump in industrial production, primarily capital goods output,” it said.

In July-September, the economy grew 6.3 per cent annually, a return to a faster growth trajectory after five consecutive quarters of slowdown. Rating agency Icra said the gross value added (GVA) growth is likely to improve to 6.8 per cent in the third quarter, helped by an improvement in the services and industrial sectors. In the second quarter, GVA growth was at 6.1 per cent.

“We expect GVA growth at basic prices in year-on-year terms to print a sequential recovery of 6.8 per cent in third quarter led by the services (at 8.8 per cent from 7.1 per cent) and industry (at 6.8 per cent from 5.8 per cent), even as growth of agriculture, forestry and fishing (to 1.5 per cent from 1.7 per cent) is likely to ease,” Icra said.

Headline GVA growth in Q3 is likely to mildly exceed 6.7 per cent printed a year-ago.

During the first half of this fiscal, economic activity remained muted, partly on account of the structural transition to GST, but signs of a pick-up in growth are starting to appear.

Icra’s principal economist Aditi Nayar said higher growth in volumes in manufacturing and some of the services sub-sectors and in the government’s expenditure, a favourable base effect and an improvement in corporate earnings are expected to contribute to a sequential recovery in the y-o-y growth of GVA at basic prices in Q3.

Growth in the services sector is likely to record a base-effect led pick-up to nearly 8.8 per cent in Q3 from 7.1 per cent in the second quarter.