1488195826_xXIIIs_post-demonetization.jpg 
"Compared to their pre-pandemic levels (1QFY20), real GDP growth and real GVA growth in 1QFY23 were quite weak at only 3.8 per cent and 4.7 per cent, respectively," according to the report
Photo Credit :
Kotak Mahindra Bank on Thursday slashed financial year (FY) 2023 and FY2024 real GDP growth estimates by 50 bps each to 6.8 per cent and 6 per cent with downside risks
The bank in a report said that downside risks are increasing from global factors and the lagged impact of domestic monetary policy tightening.
While talking about downside risks to growth from the global side, the bank said that in the near term, demand conditions are likely to remain steady, led by a continuing pick-up in the services sector.
The onset of the festive season will also likely provide support to growth. However, downside risks are increasing from higher probabilities of a recession across major advanced economies (effects of which are likely to spill into FY2024E) impacting exports, manufacturing, and flows; slowing global demand percolating to domestic demand, which can push out the investment cycle further; and the lagged impact of domestic monetary policy tightening.
The report also mentioned that the quarter one FY23 real GDP growth of 13.5 per cent surprised on the downside. Compared with pre-pandemic levels, growth was quite tepid, led by the services sector, reflecting a partial recovery in contact-based services.
"It added that in the near term, demand conditions are likely to remain steady, led by a continued pick-up in the service sector and the onset of the festive season," the report mentioned.
Government consumption, expectedly, grew at a slower pace of 1.3% (4QFY22: 4.8 per cent).
On a QoQ basis, real GDP growth contracted sharply by 9.6 per cent (directionally in line with the seasonal trend), mainly due to government consumption contracting by 10.4 per cent and investments (GFCF) contracting by 6.8 per cent, it added.
Talking about the manufacturing sector, its growth was relatively weak at only 4.8 per cent even though it has been registering a gradual recovery in the past quarters.
Within services, “public administration, defence and other services” led the growth followed by trade, hotels, etc. (26.3 per cent and 25.7 per cent, respectively), it said.
It added that part of the informal sector (within public administration, etc.) has likely registered strong growth, given that government spending within the segment has been muted.
On a QoQ basis, real GVA contracted by 7.2 per cent (directionally in line with the seasonal trend), mainly due to agriculture ((-)13.3 per cent) and industry ((-)12.6 per cent).
"Compared to their pre-pandemic levels (1QFY20), real GDP growth and real GVA growth in 1QFY23 were quite weak at only 3.8 per cent and 4.7 per cent, respectively," according to the report.