Economy Updates and Sentiment

Economy Updates and Sentiment
Economy Updates and Sentiment

by Tanushree Jaiswal Last Updated: Sep 01, 2023 - 06:25 pm 138 Views

During the first quarter of the fiscal year 2024 (1QFY24), the economy experienced a notable increase in its Gross Domestic Product (GDP) by 7.8%. This growth was widespread across various sectors, with investments growing faster than consumer spending. As we are now approaching the season with full of festival, both local and global demand appear to be holding up well.

The growth in economic activity is likely to have peaked during this quarter, and we expect growth rates to gradually slowdown in the coming periods. Looking ahead, we expect positive economic conditions in the short term due to the festive season. Global demand has also been stronger than expected.

In terms of specific indicators, investment growth outpaced consumer spending, with Real GDP growth at 7.8%. Private consumption improved compared to the previous quarter, while government expenditure remained relatively weak. Services, such as financial and real estate services, drove Gross Value Added (GVA) growth, while industrial activity was moderate.

Assessing the quality of these growth rates has become more challenging due to the unusual shifts caused by the ongoing impact of the pandemic. However, these issues are expected to stabilize over the next year.

While high-frequency indicators indicate resilient economic activity in the near future, there might be some slowdown due to factors like:

1. Tightening financial conditions
2. Previous interest rate increases
3. Weather disruptions
4. High inflation. 

This impact could become evident during the festive season. As a result, we can expect a moderation in GDP growth in the second half of FY2024 compared to the first half.

The global economic scenario has performed better than expected, and we hope that any potential slowdown might occur later than initially expected. Given these factors, you can expect little adjusted in GDP growth estimates for FY2024 upwards by a small margin and slightly lowered our expectation for FY2025.

Overall, the current economic updates point towards a mix of positive and negative factors shaping the economy's trajectory. While growth remains a possibility, certain challenges and uncertainties could impact the pace of economic expansion.

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About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.


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