India’s Quarter Three GDP Surprises Economists, Predictions Overshot

India‘s economy exceeded expectations in the third quarter with a growth rate of 8.4%, according to the National Statistical Office (NSO), surprising economists who had forecasted lower figures.

The IMF had projected India’s GDP to surpass most major economies like the USA, China, and Japan, with the unexpected growth demonstrating the resilience of the Indian economy during a time of global economic uncertainty.

The Confederation of Indian Industry (CII) expressed optimism about India’s economic future, highlighting confidence in continued growth at rates exceeding 7% over the medium term.

The manufacturing sector, accounting for 17% of the Indian economy, witnessed a significant expansion of 11.6%, aiding in the overall GDP acceleration.

Despite the positive economic indicators, concerns linger over weakening rural consumption demand due to a contraction in the agricultural sector. The Ministry of Agriculture and Farmers' Welfare reported a 6.1% decline in foodgrain production for the 2023-24 crop year.

Investment levels, measured by the Gross Fixed Capital Formation (GFCF), showed a rise of 32.4% annually in the December quarter, signaling increased investor confidence and economic activity.

The private consumption sector dipped by 4.4% during the quarter, raising questions about sustaining domestic economic growth without robust consumer spending.

As the government focuses on boosting capital investment within the economy, the strong performance in manufacturing, construction, and mining sectors has driven the GDP growth uplift in Q3.