‘Some slackening of momentum but GDP may have risen 6.8% in Q2’

• The Reserve Bank of India (RBI) predicts a 6.8% growth in India’s GDP in Q2 2024-25, slightly higher than the 6.7% increase in Q1.

• The growth is supported by robust domestic engines despite geopolitical tensions.

• High-frequency indicators such as GST collections, automobile sales, bank credit growth, merchandise exports, and the manufacturing purchasing managers’ index (PMI) have shown a slackening of momentum in Q2.

• The article highlights a sequential improvement in consumer perceptions about the current situation and future expectations, and continued optimism among industry players about future growth prospects.

• Supply chain pressures eased in September, falling below historical average levels, but remain vulnerable to geopolitical risks.

• The article also flags concerns around stretched valuations in Indian stock markets and the uncertainty surrounding geopolitical conflicts in the Middle East.

• Inflation surged in September due to an adverse statistical base effect and a resurgence in food price momentum.

• The article warns that food price pressures in respect of vegetables could be transitory with robust kharif harvest arrivals.

• Net importer countries face the passthrough risk of increase in commodity prices, especially of crude oil and metals.