GDP preview: Why is India likely to retain fastest-growing economy tag

The official print for Q4 FY23 and full year FY23 will be released by the National Statistical Office later on Wednesday. Analysts expect Q4 GDP growth to be at least 5 per cent, and the consensus is that FY23 GDP growth will be around the official advance estimates of 7 per cent, which will make India the fastest growing major economy.

“SBI’s model, based on 30 high frequency indicators from key sectors, and tuned/trained to project the GDP numbers forecasts the quarterly GDP growth for the Q4FY23 at 5.5 per cent. At this rate, India’s GDP growth for FY23 is likely at 7.1 per cent,” said Soumya Kanti Ghosh, chief economic advisor, State Bank of India Group.

“In India, domestic consumption and investment stand to benefit from stronger prospects for agricultural and allied activities, strengthening business and consumer confidence, and strong credit growth,” he said.

“Growth recovery remains on track with Q4FY23 GDP growth expected at 5.1 per cent y-o-y versus 4.4 percent in Q3. Recovery is likely to be led by the services sector with a pick-up in trade, hotel and transportation and government expenditure,” said Gaura Sengupta, India economist at IDFC First Bank. Sengupta sees FY23 GDP growth at 7 per cent, same as the NSO’s projections.

Capex cycle indicators showed a steady recovery with pick-up in capital goods imports (10.8 per cent YoY in Q4), steel consumption (17.1 percent YoY in Q4), capital and infrastructure production, said Sengupta.

The Finance Ministry’s latest Monthly Economic Review said that corporates have started investing in new capacity, buoyed by sustainable growth in activity. During Q4 FY23 the Centre for Monitoring Indian Economy reports the completion of projects worth Rs 60,000 crore and the announcement of new projects valued at Rs 10.9 trillion, the Ministry had stated.

“Economic activity in Q4FY23 remained uneven, with domestic demand for services outpacing that for goods and surprisingly robust exports of services amidst a contraction in merchandise items,” said Aditi Nayar, Chief Economist, ICRA Ltd.