Organization of Petroleum Exporting Countries or OPEC stated in a latest monthly update that the latest data reveals that the Indian economy grew by 6.7%, y-o-y, in 2Q24, a deceleration from the 7.8%, y-o-y, growth recorded in 1Q24. This slowdown is partly attributed to a contraction in final government consumption expenditure, which decreased by 0.2% in 2Q24 compared to growth of 0.9% in 1Q24. Conversely, final private consumption expenditure saw an increase, rising to 7.5%, y-o-y, growth in 2Q24 from 4.0%, y-o-y, in 1Q24. Gross fixed capital formation also improved, growing by 7.5%, y-o-y, in 2Q24, up from 6.5%, y-o-y, in 1Q24. Recent heatwaves appear to have adversely affected consumer spending, contributing to a decline in consumer confidence, which fell to 93.9 in July from 97.1 in May.
Economic growth in India is expected to remain robust in 2H24. India’s economy grew by 8.1%, y-o-y, in 3Q23 and 8.5%, y-o-y, in 4Q23, which sets a high comparison baseline for this year. Consequently, growth is projected to soften to 6.5%, y-o-y, in 3Q24 and 6.2%, y-o-y, in 4Q24. Government spending is anticipated to recover slightly in 2H24 following a contraction in 2Q24 due to election-related factors. The new coalition government is likely to continue supporting manufacturing and production through PLI schemes, which should help sustain IP levels. Additionally, addressing employment and labour market imbalances is expected to positively impact consumer demand.