Outlook for Q3 FY25 appears bright after moderation in Q2: Indian govt

Real gross domestic product (GDP) growth is likely to recover to 6.8 per cent and 6.5 per cent in Q3 and Q4 FY25 respectively.

Growth for FY26 is projected at 6.7 per cent, while headline consumer price index (CPI)-based inflation is projected to average 3.8 per cent in the fiscal, the Monthly Economic Review for November by the department of economic affairs under the finance ministry said.

An increase in the minimum support price for rabi crops, high reservoir level and adequate fertiliser availability bodes well for rabi sowing. Industrial activity is likely to gain traction.

The October and November 2024 purchasing managers’ index remained firmly in the expansionary range, supported by new business growth, strong demand and advertising efforts.

The conclusion of the monsoon season and the expected increase in government capital expenditure are expected to support the cement, iron, steel, mining, and electricity sectors.

However, many major economies' global uncertainties and aggressive policies threaten domestic growth, the report noted.

Rural demand remains resilient, and urban demand is picking up.

“Therefore, there are good reasons to believe that the outlook for growth in H2 [the second half] of FY25 is better than what we have seen in H1. At the same time, the possibility that structural factors may also have contributed to the slowdown in H1 should not be ruled out,” the report noted.

Looking into FY26, global trade growth is looking more uncertain than before. Elevated stock markets continue to pose a big risk. The strength of the US dollar and a rethink on the path of policy rates in the United States have put emerging market currencies under pressure, it added.

ALCHEMPro News Desk (DS)