Nomura’s research note added: India’s GDP growth in Q4 2022 disappointed. It was recorded as 4.4 percent. It was 6.3 percent in the third quarter. Growth has slowed due to fundamental effects such as inflation. Domestic demand for private consumption and fixed investment remains weak.
On the plus side, however, imports have weakened faster than exports. Due to high demand in the services sector, its exports increased. This helped offset the decline in goods exports. Fixed investments grew by 8.3 percent year-on-year. But it is less developed. This is evidence that the investment cycle has weakened.
We believe that India’s growth cycle has peaked. Comparing data for January with December, the investment and industrial sectors remained flat. Consumption has increased slightly. Weakness in export and import volumes is a signal of weak trade and domestic activity.
The government is taking steps to increase public capital expenditure to promote economic growth. But this year will be challenging. Only if India can maintain a moderate income will the investment yield the desired results. Overall, India’s growth drivers are slowly faltering. We have a growth forecast of 5.3 percent in FY 2023-24. And our view is that growth will recover to 6.9 percent in 2024-25. But we see the opposite risk. This is stated in the study note.