Nomura Raises FY24 GDP Estimate to 6.7%, Expects Sharp Moderation to 5.6% in FY25

Japanese brokerage Nomura on Friday sharply revised its FY24 real GDP growth estimate for India to 6.7 per cent from 5.9 per cent, a day after official data for the second quarter expansion surprised on the upside. Economists at the brokerage, however, maintained that they still expect a slowdown in growth to 5.6 per cent in FY25.

In a note, the economists cited a likely slowdown in public capex ahead of the election, continued sluggishness in rural demand and private capex, waning terms of trade tailwind, and a likely global growth slowdown for its call on the sharp moderation in FY25. They said the September quarter growth at 7.6 per cent was led by a stronger pickup in fixed investment and government consumption (on the demand side) and stronger manufacturing and construction output growth (on the supply side).

Overall, the government appears to be in the driver’s seat both for consumption and investment while private consumption and private capex remain weak, the note said. Lower commodity prices have also boosted firm profits, implying a major growth tailwind due to terms of trade, it said.

The Reserve Bank is likely to upwardly raise its FY24 GDP growth estimate to up to 6.7 per cent from the present 6.5 per cent, the brokerage said. We expect continued policy pause, amid hawkish talk. We maintain our baseline view of 1 per cent of cumulative policy rate cuts, it said, adding that it now expects the first cut only in August next year.