Nomura Cuts India's FY25 Growth Forecast to 6.7% After Disappointing GDP Data | Analysis and Outlook for Investors
Nomura, a leading financial institution, has revised down its economic growth forecast for India in the fiscal year 2025 to 6.7% from 6.9%. This decision came after the release of official data showing that India's GDP growth in the April-June quarter fell short of expectations.
According to Reuters, India's GDP expanded by 6.7%, lower than the 6.9% predicted by experts in a Reuters poll and the 7.8% growth recorded in the previous quarter. The slowdown was primarily attributed to reduced government spending during the national elections.
Nomura analysts highlighted that the Q2 GDP data were weaker than anticipated, with uncertainties surrounding the impact of transient factors like elections versus persistent factors such as decelerating profit growth. Despite this, economists believe that the economic slowdown in India will be temporary, with expectations of a rebound in growth aided by declining inflation and increased government expenditure.
However, Nomura cautioned that challenges remain, stating, "Even as government spending revives, lower corporate profit growth and a moderation in credit growth are likely to persist as growth drags."
In contrast, Goldman Sachs and J.P. Morgan maintained their GDP forecast for India at 6.5% for the fiscal year 2025.
In conclusion, investors should closely monitor the evolving economic landscape in India, considering the impact of government policies, corporate performance, and credit market dynamics on future growth prospects. Stay informed and make well-informed investment decisions to navigate the changing market conditions effectively.
