Q1 GDP growth seen at 14-15% on services' revival

The Indian economy likely grew at 14-15% in the first quarter of the current fiscal year, riding a recovery in contact-intensive sectors even as the rest of the economy held firm despite multiple headwinds, a poll of economists indicated. While uncertainty still looms, economists say the worst may be over.

GDP data for the first quarter will be announced on August 31.

The median estimate in the poll of 10 economists was 14.43%. It pegged FY23 growth at 7.2-7.6%. The Reserve Bank of India (RBI) has forecast 16.2% GDP growth for the first quarter and 7.2% for the fiscal year.


Improvement Broad-based
The low base of the pandemic-hit first quarter last year would have magnified Q1 growth this year.

High-frequency indicators released during the first quarter show that there is a pick-up in economic activity despite global headwinds, said Abheek Barua, chief economist, HDFC Bank.

The recovery in contact-intensive sectors such as travel, cinemas and dining among others as the pandemic abated, supported the economy even as high inflation took a toll on some consumer sectors.

Nomura said improvement in high-frequency data has been broad-based across consumption, investment, industry and the external sector, although exports have started to struggle.

"Overall, we expect sequential momentum to remain strong in Q1 FY23," said Aurodeep Nandi, India economist and vice president at Nomura.

High commodity prices, steep inflation and rising interest rates have dented sentiment, but the impact in the June quarter has been limited.