ICRA Forecasts India's GDP Growth Moderation in Q3 FY2025-26
Indian GDP is projected to moderate to 7.2% in Q3 FY2025-26 due to slower growth in services and agriculture sectors, despite industrial gains. The contraction in government spending and weak exports contribute to this moderation. Holiday demand and GST rationalisation, however, sustain growth above 7%.
- Country:
- India
In its latest report, rating agency ICRA forecasts that India's year-on-year GDP growth will moderate to 7.2% in the third quarter of FY2025-26, a decline from the 8.2% recorded in the previous quarter. Despite improvements in the industrial sector, slower expansions in services and agriculture are predicted to weigh down economic performance.
Aditi Nayar, Chief Economist at ICRA, attributes this slowdown to several factors including an unfavorable base effect, reduced government capital spending, and stagnant merchandise exports. However, the festive season demand and GST rationalisation have helped maintain growth rates above 7% for the quarter.
The report also highlights a YoY contraction in the Government of India's gross capital expenditure by 23.4% in Q3, alongside a dip in services exports. Nevertheless, a marginal rise in central and state revenue spending, bolstered by economic adjustments, paints a complex picture of the country's economic outlook.
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