Q4 GDP growth may throw a surprise
Economists expect Jan.Mar. quarter growth to be higher than the 5.9% uptick forecast by the National Statistical Office; 6.5%7% Q4 GDP growth is expected to boost the govt.’s 202324 full year GDP growth estimate of 7.6% by 20 basis points
India’s GDP growth in the January to March 2024 quarter is likely to turn out to be higher than the 5.9% uptick forecast by the National Statistical Office (NSO), possibly in the range of 6.5% to 7%, which would translate into a positive boost for the official 7.6% growth estimate for 202324.
In the first three quarters of last year, real GDP growth had averaged 8.2%. Although there is some growth deceleration visible in indicators like vehicle registrations and GST revenues, analysts reckon the loss in growth momentum in the fourth quarter (Q4) of 202324, from the surprise 8.4% GDP rise recorded in Q3, will not be as steep as the NSO anticipated.
“Although it is early to quantify the Q4 activity performance, a few ultrahigh frequency indicators released so far point towards continuation of healthy momentum,” QuantEco Research said. “We see an upside risk to NSO’s Q4 GDP growth estimate of 5.9%, which in turn would impart a 20 basis points upside to the full year GDP growth estimate of 7.6%,” it added. One basis point equals 0.01 percentage point.
Based on that upside, if overall growth hits about 7.8% in 202324, GDP would have risen in the range of 6.5%6.8% during the fourth quarter.
“While... petroleum consumption, motor vehicle registrations, and GST revenue collection point towards a mild deceleration in Q4, the momentum is similar to the one observed during Q1Q3,” the firm’s economists said in a note titled ‘Optimism in ultrahigh frequency signals of Q4 economic activity’.
“It is likely that real GVA and GDP growth will be around 6% and 7% respectively, in Q4, better than the NSO’s estimates of 5.4% and 5.9%, respectively,” Motilal Oswal Financial Services’ research analysts Nikhil Gupta and Tanisha Ladha wrote in a report.
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