GDP growth at one-year high in April–June

GDP growth accelerated to 7.8% year on year in April–June 2023 (Q1 FY 2023), from 6.1% in January–March. April–June’s reading marked the best result in a year and matched market expectations. The acceleration was driven by private consumption, which increased 6.0% in April–June, above January–March’s 2.8% expansion. This more than offset government consumption sliding at a rate of 0.7% in April–June (January–March: +2.3% yoy). In addition, fixed investment fell 8.0% in April–June (January–March: +8.9% yoy), marking the worst reading since January–March 2022. Looking at the external front, exports of goods and services plunged at the steepest rate in over two years, falling 7.7% in April–June (January–March: +11.9% yoy). Conversely, imports of goods and services growth sped up to 10.1% in April–June (January–March: +4.9% yoy).

Our panelists expect GDP growth to slow in July–September but remain buoyant. Services activity continued to rise the most in over a decade in July and August, according to PMI data. ING’s Robert Carnell said: “At 7.8% YoY, India's GDP print for [April–June] was precisely in line with the consensus expectation but nonetheless, singles out India as one of the few economies in the region where growth is actually firming, not declining. Total calendar-year growth of 7% or close is within reach.” Goldman Sachs’ Santanu Sengupta and Andrew Tilton commented: “Going forward, in [July–September], we expect high inflation to squeeze real disposable income of households. Additionally, loss of income and property due to incessant rains and floods in the northern states of India is likely to keep consumption subdued in [January–September].”

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