India: GDP figures surprised to the upside – UOB

Head of Research at UOB Group Suan Teck Kin, CFA, reviews the latest GDP figures in the Indian economy.

Key Takeaways

“India’s real GDP in the Apr-Jun quarter (1QFY22-23) surged 13.5% y/y from 4.1% in the prior quarter, in line with our expectation of 14% but well below Bloomberg survey’s 15.3% and Reserve Bank of India’s (RBI) forecast of 16.2%. The gain was boosted by a low base and record increase in private consumption expenditure and increase in investment demand.”

“While the strong headline figure places India’s performance as the best among Asian countries in the quarter, the pace is expected to moderate ahead. We project 6.3% y/y in the Jul-Sep quarter (2QFY22-23), and at 7.0% for FY22-23 (or 6.8% for CY2022) from 8.7% in FY21-22.”

“With the RBI focused on containing inflationary pressures, we continue to see the central bank adding on another 50bps rate increases in the two remaining meetings in 2022 to bring the repo rate to 5.90% by the end of the year, and to pause thereafter. The next RBI policy meeting will be held in 28-30 Sep.”