India’s Q2 FY25 GDP growth decelerated to 5.4% YoY, marking the slowest expansion in seven quarters, as industrial activity weakened across key sectors. Agriculture showed resilience with 3.5% growth, while manufacturing and mining disappointed at 2.2% and -0.1%, respectively. Gross Value Added (GVA) also slowed to 5.6%, reflecting subdued momentum in the production sectors.
Morgan Stanley attributes the sluggish growth to weaker consumption and capex trends, alongside mixed global demand. Despite the slowdown, the brokerage believes Q2 marks a potential bottom for GDP growth, with H2 FY25 likely to see recovery driven by policy measures, improved rural consumption, and easing inflation.
The firm stressed the need for targeted fiscal and monetary policies, including rate cuts and liquidity measures, to accelerate industrial recovery and stabilize the economy. Morgan Stanley reiterated its expectation that growth would improve in 2025, supported by structural reforms and global tailwinds, providing relief to key sectors like manufacturing and exports.
