Q1FY23 real GDP growth expected at about 9.5% YoY, says Motilal Oswal

Brokerage firm Motilal Oswal Financial Services expects India's gross domestic product (GDP) and gross value added (GVA) to be nearly 9.5 percent each in the first quarter of the financial year 2023 (Q1FY23), lower than the market consensus of 14 percent and 13.5 percent, respectively.

"A monthly analysis of select indicators for May’22 indicates a continued pick-up in economic growth. A majority of the indicators – PMI services, toll collections, Vahaan registrations, Google mobility, imports and power generation – have posted faster growth in YoY terms," said Motilal Oswal.

"Our in-house estimates suggest that the economic activity growth was much better in Apr’22 than in Q4FY22. Moreover, it seems to have remained strong even in May’22. Therefore, we believe that real GDP and GVA growth could be about 9.5 percent each in Q1FY23, lower than the market consensus of 14 percnet and 13.5 percent, respectively," said the brokerage firm.

After a seven-month hiatus of sub-6 percent year-on-year (YoY) growth, preliminary estimates of our in-house Economic Activity Index for India’s real GVA (EAI-GVA) suggest a sharp uptick of 8.2 percent YoY in Apr’22 (versus 5.5 percent in Mar’22), led by faster growth in both farm as well as non-farm sectors, the brokerage firm pointed out.

Additionally, even EAI-GDP grew at an eight-month high of 9.1 percent YoY (versus 7.7 percent YoY in Mar’22) driven by strong investments and private consumption expenditure, the brokerage firm added.

EAI-GVA details suggest that the Farm sector grew 7.6 percent YoY in Apr’22 (versus 2.3 percent YoY in Mar’22). Besides, even the nonfarm sector grew at an eight-month high of 8.2 percent YoY, fueled by faster growth in both services and industrial activities.

Motilal Oswal highlighted that total consumption grew slowly at 8.3 percent YoY in Apr’22, dragged down by modest growth in government spending. Excluding fiscal spending, private consumption grew at an eight-month high of 6.6 percent YoY in Apr’22 (versus 4.9 percent YoY in Mar’22). Investments, conversely, grew sharply by 10.6 percent YoY in Apr’22, more than double the growth of 5.4 percent YoY seen in Mar’22.

Disclaimer: This article is based on a report by brokerage firm Motilal Oswal Financial Services. The views and recommendations made above are those of the broking firm and not of MintGenie.