India’s GDP growth for the September quarter (Q2 FY25) slowed to 5.4% YoY, significantly below market expectations of 6.5%, according to UBS. The firm has revised its FY25 real GDP growth forecast downward to 6.3% YoY from earlier estimates, citing weak consumption and capital expenditure (capex) trends.
UBS noted that the slowdown was particularly pronounced in the industrial sector, while net export contributions improved. The agriculture sector posted growth of 3.5%, but manufacturing slowed to 2.2%. UBS emphasized the need for monetary and fiscal policy interventions to steer growth toward 6.5% YoY, as domestic demand remains tepid.
Looking ahead, UBS anticipates a sequential recovery in the second half of FY25, driven by improved rural demand and policy support. However, the firm underlined the importance of addressing asset quality concerns and boosting liquidity to ensure a sustained recovery.
