Nomura Lowers India's FY25 GDP Growth Forecast to 6.7%

Nomura Lowers India’s FY25 GDP Growth Forecast to 6.7%

Nomura has revised India's FY25 GDP growth forecast to 6.7%, down from 6.9%, due to a slowdown in consumer demand, lower government spending, and weak industrial activity. Despite this, the medium-term outlook remains cautiously optimistic with easing inflation and potential government support.

Piyush Shukla Published On January 4th, 2025

Nomura has adjusted its forecast for India’s fiscal year 2025 GDP growth to 6.7%, down from the previous estimate of 6.9%. This revision follows official data indicating a slowdown in the April-June quarter, where GDP growth was 6.7%, below expectations and a decline from the 7.8% growth in the previous quarter.

Key Factors Influencing the Downgrade

Government Spending: A reduction in government expenditure during the national elections contributed to the economic deceleration.

Consumer Demand: Weak urban consumption, attributed to high interest rates and moderating wage growth, has been a significant factor.

Industrial Activity: Declines in sales of passenger vehicles and commercial vehicles suggest a slowdown in industrial activity.

Comparative Analysis

Despite Nomura’s conservative outlook, other financial institutions maintain a more optimistic view:

Goldman Sachs and J.P. Morgan: Both have kept their FY25 GDP growth forecasts for India at 6.5%.

Implications and Outlook

Nomura anticipates that easing inflation and increased government spending will support growth in the near future. However, challenges such as lower corporate profit growth and moderated credit growth may continue to impact the economy.

Summary of the news

Why in News	Key Points
Nomura Revises India’s FY25 GDP Growth	– Nomura has revised India’s FY25 GDP growth forecast to 6.7% from 6.9%.
Factors for Revision	– Weak consumer demand due to high interest rates and moderating wage growth.
	– Lower government expenditure during national elections.
	– Decline in industrial activity (e.g., reduced vehicle sales).
Economic Indicators	– Official data: India’s GDP growth in the April-June quarter was 6.7%, lower than expected.
Nomura’s Economic Forecasts	– FY26 GDP growth forecast: 6.8%.
Outlook by Other Institutions	– Goldman Sachs and J.P. Morgan maintain a 6.5% growth forecast for FY25.
Government Measures	– Expected easing of inflation and increased government spending to support growth.