ICRA Estimates India’s GDP Growth at Four-Quarter Low of 7% in April-June

India’s economic growth is expected to moderate slightly in the first quarter of the current financial year. Rating agency ICRA has estimated India’s real GDP growth at 7% for the April-June quarter, which would mark the lowest growth rate in four quarters if the estimate is confirmed by official data.

Growth to Slow From Previous Quarter

India’s GDP grew by 7.4% in January-March quarter. So the predicted 7% growth in April-June signals a slight slowdown in economic activity.

Even with the moderation, 7% growth would still be a robust expansion rate compared with many of the world’s larger economies. Domestic consumption, investment and services are expected to continue to be important drivers of economic activity.

Sectors to Watch Out

ICRA’s estimate indicates that some industrial and services activity may have witnessed slower momentum during the quarter. At the same time government spending, investment in infrastructure and domestic demand could continue to underpin the economy.

Economists will be watching closely for signs of the overall strength of growth in areas like industrial production, consumer demand, investment activity and services sector performance.

Awaiting official GDP data

The ICRA projection is an estimate and may be different from the final GDP numbers to be released by the government. The official numbers should give a better sense of how the economy performed during the April-June period.

The figures will also be watched for signs of shifts in consumption, investment and business activity. Likely moderation suggests some loss of momentum but India’s underlying growth prospects are still quite strong.

Prospects for the Indian Economy

India continues to enjoy strong domestic demand and public investment in infrastructure. These factors are expected to remain important in underpinning economic growth in the coming quarters.

So the next official GDP numbers will be crucial for policymakers, investors and companies trying to get a handle on the direction of India’s economic recovery and expansion.