2024.02.2916:07:00UTC+00India GDP Growth Climbs To 8.4% In December Qtr

India's economic growth improved strongly to 8.4 percent year-on-year in the December quarter from 7.6 percent in the previous three months, preliminary estimates from the statistics ministry showed Thursday. Economists had forecast the growth rate to slow to 6.6 percent.

Manufacturing registered double-digit growth of 11.6 percent in the December quarter, followed by 9.5 percent in the construction sector.

For the financial year ending March 31, economic growth is estimated at 7.6 percent as compared to 7.0 percent in 2022-23.

Yearly growth came in above the 7.3 percent forecast by the Reserve Bank of India. The central bank has projected 7.0 percent growth for 2024-25. Double-digit growth of 10.7 percent in the construction sector, followed by 8.5 percent growth in manufacturing boosted the GDP growth in FY 2023-24, the ministry said.

Late January, the International Monetary Fund raised India's growth outlook for this year and next by 0.2 percentage points each to 6.5 percent, due to the resilience in domestic demand.

Capital Economics economist Thamashi De Silva said the growth momentum may fade slightly going forward as household consumption is likely to moderate as a result of the tightening of restrictions on unsecured lending, and the lackluster global backdrop is likely to weigh further on exports. That said, the government's infrastructure drive is likely to prop up activity, the economist said.

"This limits any immediate need for rate cuts," De Silva said. "We think the RBI will only start easing policy in Q3 2024, much later than most other major EMs."