SBI Projects India's GDP Growth at 6.3% for Q3 of 2024-25
Click to start listening
Synopsis
On February 19, SBI economists forecasted India's GDP growth for Q3 of FY25 at 6.2-6.3%, driven by strong demand and capital expenditure trends. The report indicates a recovery from a previous slowdown and highlights positive indicators in various sectors.
Key Takeaways
- GDP growth forecast at 6.2-6.3% for Q3 FY25.
- Improved indicators with 74% showing acceleration.
- Rural economy stability supports overall growth.
- Capital expenditure trends are showing positive momentum.
- India remains one of the fastest-growing economies globally.
New Delhi, Feb 19 (NationPress) Economists at SBI have estimated that India's GDP growth for the third quarter (October-December) of 2024-25 will range between 6.2 and 6.3 percent. This growth is attributed to robust demand and capital expenditure trends, along with the rise in EBIDTA and corporate GVA reported by Indian corporations.
The SBI report, published on Wednesday, regards the slowdown observed in the second quarter (Q2) as a mere “blip”. It states, “assuming no significant revisions are made to the previous Q1 and Q2 figures by NSO, we project the full-year GDP for FY25 at 6.3 percent.”
The official GDP statistics for the third quarter are anticipated to be disclosed on February 28.
According to the report, the share of indicators exhibiting acceleration has risen to 74 percent in Q3FY25 compared to 71 percent in Q2FY25.
A thriving rural economy is sustaining stability and supporting momentum across various sectors, with consistent growth in rural agricultural wages and a notable increase in domestic tractor sales and rabi crop sowing.
The report underscores that capital expenditure is witnessing improvement in Q3 FY25, despite the fact that the majority of state capital expenditure as a percentage of the budget estimate remains lower in FY25 to date. However, there is a resurgence in Q3 FY25, which bodes well for future growth.
Moreover, the report indicates that IIP manufacturing growth has escalated from 3.3 percent in Q2 FY25 to 4.3 percent in Q3 FY25, and the SBI Index is also reflecting positive trends in Q3.
Indian corporations have reported an increase in EBIDTA growth and margins (44 bps) after two quarters, with substantial improvements in corporate GVA on a quarter-on-quarter basis, as noted in the report.
Despite the global economic slowdown, India continues to be one of the fastest growing economies.
The report also mentions that the latest update from the IMF regarding global growth forecasts estimates India’s growth at 6.5 percent for both FY25 and FY26, supported by strong domestic demand, infrastructure development, and strategic government policy interventions.
SBI has developed a ‘Nowcasting Model’ to statistically estimate GDP using 36 high-frequency indicators linked to industrial activity, service activity, and the global economy.
This model employs the dynamic factor model to derive the common or latent factor from all high-frequency indicators spanning from Q4 of FY13 to Q1 of FY23.
