- Three developments are discussed in this note.
- Firstly, India’s Oct-Dec23 real GDP growth surged to 8.4% yoy, diverging from GVA
- Second, the ‘Goldilocks’ economic backdrop could delay the easing cycle.
- Third, the recently released household expenditure survey sheds light on to the Indian consumer
- Implication for forecasts: We dial up our FY25 GDP forecast and pare rate cut expectations.
This is a summary of the note. Please view the PDF for the detailed report including the charts
#1 Key takeaways from the 3QFY24 (Oct-Dec23) growth numbers
India’s 3QFY24 (Oct-Dec23) real GDP surpassed expectations to grow by 8.4% yoy (consensus at 6.6%). This was accompanied by revisions to the 1Q and 2QFY24 prints to 8.2% and 8.1%, up from 7.8% and 7.6% respectively. This diverged sharply from the supply side measure of GVA (gross value added) output. GVA moderated along expectations to 6.5% yoy vs the revised 7.7% in the quarter before.
Dialling up the FY25 growth forecast
The Indian economy has exhibited notable resilience so far and is expected to extend its firm run into the next year. We dial up our GDP growth estimate for FY25 to 6.5% yoy vs 6.2% earlier and GVA at 6.4%. This upward revision is driven by four forces.
#2 Will ‘Goldilocks’ delay the easing cycle?
Thursday’s strong growth numbers align with the monetary policy committee’s (MPC) optimism on growth but are also likely to leave them cautious on an eventual liquidity and rate pivot.
#3 Key takeaways from the recently released consumption spending survey
The Household Consumption Expenditure Survey (HCES) survey was conducted after a 11-year gap by the NSSO and MOSPI between August 2022 and July 2023, with the key objective of getting updated trends of the monthly per capita consumption expenditure (MPCE) across the country. We highlight key takeaways from the survey in the PDF and associated charts.
Macro impact of the survey: The impact and relevance of this survey will be notable for a revisit to the current inflation basket composition and consumption breakdown. Based on the current findings, the share of food will likely be lower by 30-40bp, from 46% to 41-42%. That said, a change in the CPI basket is not imminent. Authorities plan to conduct further rounds of the survey (one is underway) and before considering a revision of the CPI composition. The latter is more likely next year. Despite the marginal correction in the share of cereals and vegetables, readings are likely to stay relatively volatile. For policy, the higher share of non-food categories suggests the focus on ‘core’ segments will remain.
To read the full report, click here to Download the PDF.
Topic
Explore more
E & S FlashGENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates)
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.