Strong bounce likely in Q2 GDP data, lead indicators show uptick

India’s GDP may have grown at approximately 6.5 per cent in September quarter compared with a 5.7 per cent expansion in June quarter, the Economy Indicator launched by ETNow on Thursday showed.

This will suggest accelerated expansion of the economy after two quarters of subdued growth and show a recovery from the negative impact of demonetisation and the pain of GST implementation hiccups.

September quarter GDP data will released after market hours on Thursday.

Growth of the agriculture sector may still remain muted, as few of the leading food grain producing states witnessed monsoon deficit. Industry & services sector growth is likely to be better quarter on quarter.

Data points suggest most economic indicators across consumption and business baskets looked up in Q2.



Q2 corporate earnings have been better than that of Q1 and there has been some pickup in IIP and core sector growth. On the services front, government spending may have been lower, as most of it got frontloaded in Q1.

But other data points have been upbeat: there was an uptick in air traffic and railway traffic growth and foreign tourist arrivals; bank credit growth is nearing 9 per cent. Broadly, gross fixed capital formation is likely to remain subdued.

Economists and industry experts would be eyeing the GDP data keenly.

SBI Economist SK Ghosh in a report said: “Recent macro-economic indicators show a recovery in economic activity. Finally, to bury the debate once and for all, FY18 GDP growth could touch 7 per cent on the back of revisions in FY17 GDP growth.”

Not all share the same optimism, though. DBS Economist Radhika Rao in a report said the divergence between the soft real economy and buoyant financial markets may not persist in 2018. “Macro risks have risen; we expect growth to be slower at 6.6 per cent in FY18, before improving to 7.2 per cent in FY19.”