Headline growth moderate rather sharply in Q3FY23 to 4.4% YoY from 6.3% in Q2

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Mar 01, 2023

QuantEco Research || Q3 FY23 GDP - Loss of momentum or a data mirage?

India’s GDP growth in Q3 FY23 has a soft kernel with a hard core. Headline growth moderated rather sharply to 4.4% YoY from 6.3% in Q2. However, the seasonally adjusted sequential momentum on QoQ basis appears strong. Outperformance of services over industry and investments over consumption continue to dominate the overall narrative. Easing of drag on account of net exports offers much needed respite. We maintain our FY23 GDP growth estimate of 6.8%, marginally lower than NSO’s estimate of 7.0%. Going forward, we continue to expect GDP growth to moderate to 6.0% in FY24 on account of complete waning of pent-up demand, lagged impact of accelerated monetary tightening, gradual fiscal belt tightening (esp. via lowering of revenue expenditure), simmering of geopolitical uncertainty and adverse spill overs from the expected global slowdown.