Impact of Post-Festival Slowdown on Q3 Growth: Economists
Mumbai: Economists are warning of a potential slowdown in growth for the third quarter following a post-festival moderation, based on recent economic reports. The initial spike in economic activity seen in October has started to taper down in November, signaling a shift in momentum. This slowdown is evident in key indicators like payments and manufacturing data, raising concerns among experts and analysts.
Signs of Slowdown
According to Kaushik Das, an economist at Deutsche Bank, the latest high-frequency indicators point towards a deceleration in growth. In December 2024, GST growth stood at a mere 7.3% year-on-year, marking the fourth consecutive month of single-digit growth. Additionally, the Manufacturing Purchasing Managers’ Index (PMI) for the same period hit a 12-month low of 56.4, reflecting a downward trend in industrial activity.
Expert Analysis
Das emphasized the need for a positive shock to reignite growth momentum, underscoring the importance of forward-looking monetary policy. He projected India’s real GDP growth to hover around 6.5% year-on-year in the fiscal years 2025 and 2026, below the economy’s potential growth rate of 7-7.5%. This cautious outlook highlights the challenges ahead in sustaining economic expansion.
Divergent Trends
A report by Motilal Oswal revealed conflicting trends in economic indicators for November and December 2024, pointing to an uneven growth trajectory. Real GDP growth for Q3 is expected to inch up slightly to 5.5%-5.7% year-on-year, falling significantly short of the Reserve Bank of India’s forecast of 6.8%. The Economic Activity Index-to-GDP, a key measure of overall economic output, saw a rare decline of 0.8% year-on-year in November, reflecting the impact of external trade dynamics on GDP growth.
In summary, the Indian economy is at a critical juncture, with experts cautioning against complacency in the face of mounting challenges. As the nation navigates through a period of uncertainty, proactive policy measures and strategic interventions will be essential to steer the economy towards sustainable growth and resilience.
Random Humanizing Touch:
Imagine waking up to the aroma of freshly brewed coffee on a chilly winter morning, savoring each sip as you contemplate the economic landscape painted by these recent developments. How do these macro trends trickle down to impact your daily life, and what steps can you take to navigate the shifting tides of economic uncertainty? Let’s delve deeper into the story behind the statistics and explore the human side of the economic narrative.
