The bank’s analysis is based on 50 consumption and demand indicators.
“The percentage of indicators showing acceleration declined to 69% in Q2 FY25 compared to 80 % in Q2 FY24 and 78 % in Q1 FY25,” said the report. In the first quarter of this fiscal, the economy grew 6.7%. The narrative will change in the third quarter, the report said.
India will record a growth rate of 7.2-7.3% in the October-December quarter, it said, with overall gross domestic product (GDP) growth in 2024-25 projected to be 6.9-7%. The official figures for the second quarter will be released on November 29. Rural demand will be a key driver of economic recovery, the report highlighted. Growth in sales of domestic tractors increased in October, while two-wheeler and three-wheeler sales remained consistent in growth. In August, rural agricultural wage growth had accelerated. On urban demand, the report said that trends indicate changing urban demographics and a growing preference for quick commerce which is not being captured accurately.
Early data from October indicates signs of recovery in the second half of the year, according to a report by Morgan Stanley. Government spending, easing financial conditions and pick-up in private sector announcement are some of the key factors which will contribute to this growth, it said.
The HSBC India Services Purchasing Managers’ Index released on Wednesday improved to 58.5 in October from 57.9 in the month before. Manufacturing activity also recorded an uptick in October, increasing to 57.5 from 56.5 in September..