Q4 GDP growth may throw up a positive surprise at 6.5%-7%

India’s GDP growth in the January to March 2024 quarter is likely to turn out to be higher than the 5.9% uptick penned in by the National Statistical Office (NSO), possibly in the range of 6.5% to 7%, which would translate into a positive surprise for the official 7.6% growth estimate for 2023-24.

India’s GDP growth in the January to March 2024 quarter is likely to turn out to be higher than the 5.9% uptick penned in by the National Statistical Office (NSO), possibly in the range of 6.5% to 7%, which would translate into a positive surprise for the official 7.6% growth estimate for 2023-24.

In the first three quarters of last year, real GDP growth had averaged 8.2%. Although there is some growth deceleration visible in indicators like vehicle registrations and GST revenues, analysts reckon the loss in growth momentum in the fourth quarter (Q4) of 2023-24, from the surprise 8.4% GDP rise recorded in Q3, is reckoned to be not as steep as the NSO anticipated.

“Although it is early to quantify the Q4 activity performance, a few ultra-high frequency indicators released so far point towards continuation of healthy momentum… We see an upside risk to NSO’s Q4 GDP growth estimate of 5.9%, which in turn would impart a 20 basis points upside to the full year GDP growth estimate of 7.6%,” QuantEco Research said on Wednesday. One basis point equals 0.01 percent.

Based on that upside, if overall growth hits about 7.8% in 2023-24, GDP would have risen in the range of 6.5%-6.8% during Q4.

“While indicators like petroleum consumption, motor vehicle registrations, and GST revenue collection point towards a mild deceleration in Q4, the momentum is similar to the one observed during Q1-Q3,” the firm’s economists said in the note titled ‘Optimism in ultra-high frequency signals of Q4 economic activity’.

“It is likely that real GVA and GDP growth will be around 6% and 7% respectively, in Q4, better than the NSO’s estimates of 5.4% and 5.9%, respectively,” said Motilal Oswal Financial Services’ research analysts Nikhil Gupta and Tanisha Ladha in a report based on monthly economic activity trends.

GVA growth, based on the indicators tracked by the firm, remained strong in January at 8.2%, and February at 7.5%, while some metrics from March portray a mixed picture, they noted. In Q3, GVA or the gross value added in the economy, had slipped to 6.5%, and the NSO estimates full year GVA growth to be 6.9%.