India's Economic Slowdown: 5.4% Growth in Q2

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by Giorgi Kostiuk

2 years ago

India's economy expanded by 5.4% in the second fiscal quarter, below the forecasts of economists and the central bank.

Challenges in Economic Growth

India's GDP growth of 5.4% in the second quarter was 1.1% below Reuters economists' estimates and 1.4% below the central bank's forecast. The country's statistics agency reported sluggish growth in the mining and manufacturing sectors. As per CNBC, the slow economic growth may affect the country's interest rate policy. The Reserve Bank of India's Monetary Policy Committee is set to meet next month.

Predictions for 2025

Alicia Herrero, chief Asia-Pacific economist at Natixis, predicted India's economic slowdown in 2025 but ruled out a recession. She forecasted a growth of at least 6.4%, with possible lower numbers. Additionally, Herrero suggested that China might produce goods in India for local consumption to avoid tariffs.

If I were the Trump administration, I would start [looking at tariffs for] Vietnam. That’s a much more obvious case.Alicia Herrero

Inflation and Consumer Demand

The Economic Times reported persistent food inflation issues for India's central bank. The latest report also highlights a rise in core inflation. Despite consumption slowdowns, essentials sales showed double-digit growth, providing hope for demand recovery. Major companies predict this trend will continue, boosting demand for the October-December quarter.

India’s economic slowdown, with figures falling short of expectations, raises concerns. However, measures are being taken to support demand and adjust central policies, likely aiding recovery.

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