India’s Q4 GDP growth may slip to lowest in four quarters

New Delhi: Poor performance of agriculture and services sectors and curbs on government investments due to the Model Code of Conduct in March are likely to have dragged India’s economic growth below 7% in the fourth quarter of 2023-24, the lowest in a year, analysts said.

According to rating agency ICRA, the gross domestic product (GDP) is likely to slip to 6.7% in the January-March quarter. A poll conducted among 54 economists by news agency Reuters also pegs the growth at 6.7%.

Most economists in the poll said growth likely slowed due to moderation in both the manufacturing and services sectors. They also cited a muted contribution from agriculture, Reuters noted in its report.

The growth in the fourth quarter is estimated to be the lowest in a year. India’s GDP expanded at a robust 8.4% in October-December 2023 period after posting 8.1% and 8.2% growth in the previous two quarters, respectively.

The National Statistical Office (NSO), which works under the Ministry of Statistics and Programme Implementation, is scheduled to release estimates on the national income and GDP on Friday. Apart from the Q4 numbers, the NSO will also release the numbers for the full financial year ended March 2024.

As per ICRA, the weakness in the fourth quarter numbers will drag the overall GDP growth to 7.8% for the full fiscal 2023-24. Despite the weakness in Q4 numbers the full year growth is set to be better than the government’s initial projection of 7.6%.

State Bank of India’s economic research department is more optimistic on the growth projections. It has pegged the Q4 growth number at 7.4%. With this the full year GDP growth will touch 8%.

The Reserve Bank of India (RBI) has projected Q4 growth at 7.3%.

The in-house developed SBI Artificial Neural Network (ANN) model with 30 high frequency indicators points to the quarterly GDP growth for the Q4 FY24 to have a reading of 7.4%, SBI’s Group Chief Economic Adviser Soumya Kanti Ghosh said in a note.

“The seismic shifts and undercurrents plaguing the global economy often precipitate in myriad forms, taking a toll on the growth appetite and wherewithal of even the most resilient jurisdictions,” Ghosh said.

“The narratives woven around rather subdued growth forecast in the Q4 FY24 for India from selected quarters seems to be more of fanning the vagaries of chequered global growth,” he added.

He further noted that “the global growth, as a respite, remains resilient, with easing inflationary pressures and tight employment conditions globally reinforcing optimism in spite of geopolitical and extreme weather event risks likely to metamorphose into turbulent headwinds going forward.”

The International Monetary Fund (IMF) in its latest world economic outlook, released in April 2024, raised global growth forecast for 2024 to 3.2%, 10 bps higher than its January 2024 update and expected the global economy to grow at the same pace in 2025, a respite from its earlier gloomy predictions.