India’s economy is growing at a steady pace on the back of strong fundamentals and the services sector is expected to hold the key to the revival, the report said
India’s gross domestic product (GDP) growth is expected to moderate by 6.5 per cent in quarter two of the financial year (FY) 2023 against an increase of 13.5 per cent seen in quarter one, according to the Bank of Baroda report.
The report said that this is led by across-the-board moderation in sectors owing to the base effect.
Even as the global economy is slowing down owing to the geo-political conflict at play and aggressive monetary tightening by global central banks; fears of recession also loom large for certain European economies.
“Agriculture growth will be higher by 3 per cent against 4.5 per cent in Q1FY23. This comes against the backdrop of above normal South-West monsoon, with marginally lower Kharif sowing this year,” the report mentioned.
As per the report, electricity is expected to clock a growth of 5 per cent in Q2FY23 compared with 14.7 per cent in Q1FY23. Within the industry, construction sector will continue to grow at a solid pace on the back of steady demand.
Talking about the outlook for FY23, the report mentioned that the high-frequency indicator for Q2FY23 has been impacted by the back-of-base effect and hence needs to be read with caution when compared with previous quarters.
Indicators such as tractor and two-wheeler sales have registered some moderation in Q2FY23, however on the back of the festive demand, a pickup is likely in the coming quarters which will lift growth.
For October 2022, the passenger sales have already begun to show early signs of recovery.
For industrial sector, while the sale of some durable and non –durable goods has been hit due to inflation in the past.
The recent trend of cool-off in prices is likely to reverse the dip seen previously in the sector. Some of the earnings report have also been signalling the same (FMCG sector), the report stated.