Union Bank Predicts India’s GDP Growth to Slow Down to 6.7% in Q1 FY25
According to a report by Union Bank, India’s GDP growth for the first quarter of FY25 is expected to moderate to around 6.7%, ahead of the official release on August 30. This is slightly below the Reserve Bank of India’s (RBI) projection of 7.1% for the same period.
Gross Value Added (GVA) Growth
The Gross Value Added (GVA) growth for Q1 FY25 is likely to settle at around 5.8%, down from 6.3% in the last quarter of the previous fiscal (Q4 FY24). The report attributes the slowdown primarily to the industry segment, election-related uncertainties, and lagged government spending.
Industrial and Manufacturing Sector
The industrial sector has seen a decline for the third consecutive quarter, with GVA growth falling from 8.4% in Q4 FY24 to 5.8% in Q1 FY25. The manufacturing segment has been particularly hard-hit, with GVA growth dropping from 8.9% to 4.5% year-on-year.
Construction and Services Sector
The construction sector also witnessed a decline, with growth slipping from 8.7% in Q4 FY24 to 7.5% in Q1 FY25. The services sector, a strong performer in the Indian economy, saw a slight reduction in growth to 6.6% from 6.7% in the last quarter.
Agriculture Sector
The agriculture sector is expected to show positive growth, spiking to 2.2% in Q1 FY25 from 0.6% in Q4 FY24, marking the highest number in the last four quarters.
Overall Growth Outlook
Despite the Q1 slowdown, the report remains optimistic about the overall growth outlook, predicting a strong 7% GDP growth for the full year. However, risks to growth include a sharper-than-expected global slowdown and uneven monsoon distribution affecting rural demand recovery.
Doubts Revealed
Union Bank -: Union Bank is a large bank in India that provides various financial services like loans, savings accounts, and more.
GDP -: GDP stands for Gross Domestic Product. It is the total value of all goods and services produced in a country in a year.
Q1 FY25 -: Q1 FY25 means the first quarter of the financial year 2025. In India, the financial year starts in April and ends in March of the next year.
RBI -: RBI stands for Reserve Bank of India. It is the central bank of India that controls the money supply and interest rates.
Gross Value Added (GVA) -: GVA is a measure of the value of goods and services produced in an area, industry, or sector of an economy.
Industrial growth -: Industrial growth refers to the increase in production and economic activities in industries like manufacturing, mining, and construction.
Election-related uncertainties -: Election-related uncertainties mean the unpredictable changes and decisions that can happen around the time of elections, which can affect the economy.
Lagged government spending -: Lagged government spending means that the government is spending money slower than expected, which can affect economic growth.
Global slowdown -: Global slowdown means that the economies of many countries around the world are growing more slowly than before.
Uneven monsoon distribution -: Uneven monsoon distribution means that the rainfall during the monsoon season is not spread out evenly, which can affect agriculture and water supply.