India’s Q3 GDP Growth Set for Release: Experts Predict Economic Rebound Amid Challenges

The National Statistics Office (NSO) is set to release India’s Gross Domestic Product (GDP) figures for the third quarter (Q3) of FY2024-25 today at 4 PM. Economists and analysts project an economic rebound, with estimates ranging from 6.2% to 6.4% growth for the October-December quarter. This marks an improvement from the seven-quarter low of 5.4% recorded in Q2 FY25, driven by a revival in rural demand, capital expenditure, and festive season spending.

GDP Growth Projections: What Experts Say

• ICRA Ltd. forecasts 6.4% GDP growth for Q3, citing increased government expenditure despite uneven private consumption.
• SBI Research projects a 6.2% to 6.3% growth rate, based on high-frequency indicators.
• Moneycontrol Poll of 19 economists estimates 6.3% growth, highlighting rural recovery and public investment as key drivers.
• Goldman Sachs has lowered India’s GDP forecast to 6.7% for 2024 and 6.4% for 2025, attributing it to reduced government spending and stricter monetary policies by the Reserve Bank of India (RBI).

Despite these optimistic projections, uncertainty looms over global trade tensions and inflationary pressures, which could impact future growth.

Key Drivers of India’s Economic Growth in Q3

1. Rural Revival and Domestic Demand

A significant contributor to India’s economic recovery is rural demand, which has picked up due to a favorable monsoon, improved agricultural output, and government support schemes. Festive season sales in December 2024 also boosted consumption, particularly in automobiles, FMCG, and consumer durables.

2. Public Capital Expenditure

The Indian government’s infrastructure push played a crucial role in driving economic growth. Increased spending on roads, railways, and urban infrastructure helped sustain economic momentum, even as private investment remains sluggish.

3. Industrial Production and Core Sector Growth

• Industrial output grew by 3.2% in December, marking a three-month low but still contributing to overall growth.
• The core sector, which includes coal, electricity, and steel production, expanded by 4%, albeit lower than the previous month’s 4.4%.

4. Services Sector Performance

The services sector, particularly IT, finance, and travel, saw steady expansion, offsetting weaknesses in manufacturing and exports. India’s booming digital economy and fintech growth also contributed positively.

Challenges: Global Trade Tensions and Inflation Risks

1. Widening Trade Deficit

• India’s merchandise trade deficit widened to $22.99 billion in January 2025, up from $21.94 billion in December 2024.
• Exports saw a decline, primarily due to global trade disruptions and lower demand in key markets like the US and Europe.

2. US-China Trade War Impact on India

• The escalation of trade tensions between China and the US, with new tariffs imposed by Donald Trump, could indirectly impact India’s supply chains and exports.
• While India stands to gain from the China+1 manufacturing strategy, global demand uncertainties could temper growth.

3. Monetary Policy and Inflation Concerns

• The Reserve Bank of India (RBI) has maintained a cautious stance on interest rates, balancing between controlling inflation and supporting economic growth.
• The rupee’s exchange rate stability remains a focus, with the International Monetary Fund (IMF) classifying India’s exchange rate as “stabilized” for 2024.

World Bank and Moody’s Outlook on India’s Growth

1. World Bank’s Perspective

The World Bank’s lead economist emphasized that India does not need 7.8% growth every year to become a developed economy by 2047. Instead, a consistent and sustainable growth trajectory is more important. Key takeaways:

• India has strong macroeconomic fundamentals, including a large domestic market, demographic dividend, and stable policy framework.
• Private investment remains weak, despite favorable financial conditions.
• Women’s participation in the workforce remains low, requiring targeted interventions.

2. Moody’s Report on Asia-Pacific Growth

• Moody’s Analytics predicts India’s GDP will slow to 6.4% in 2025, down from 6.6% in 2024, due to external economic pressures.
• The Asia-Pacific region is expected to grow at a slower pace, impacted by trade disputes and policy shifts.

Looking Ahead: What to Expect for Q4 and FY2025-26

With Q3 GDP data soon to be released, experts believe India’s economic trajectory remains resilient but not without risks. Key factors to watch in Q4 and FY2025-26 include:

• Budget 2025-26 measures: Government spending decisions will play a crucial role in sustaining economic growth.
• Private sector investment: The revival of corporate investments will be essential to long-term GDP expansion.
• Inflation control and monetary policy: The RBI’s stance on interest rates will influence consumption and borrowing trends.
• Global trade dynamics: Ongoing US-China tensions, supply chain shifts, and geopolitical risks could impact India’s external trade.

Conclusion

India’s Q3 GDP growth is expected to show a moderate recovery, driven by rural demand, public investment, and services sector expansion. However, global trade uncertainties, inflation risks, and a widening trade deficit pose challenges. As policymakers navigate these complexities, a balanced approach to fiscal policy, private sector growth, and monetary stability will be key to sustaining India’s economic momentum in the coming quarters.

Official Q3 GDP Data Release

The NSO will release India’s Q3 GDP figures at 4 PM today, providing a clearer picture of the country’s economic performance and growth outlook for 2025. Stay tuned for further updates.