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Slowing GDP Growth Opens Door for Rate Cuts in Q4.

INDIA


  • India’s GDP moderated to 6.7% yoy in the second quarter, down from 7.8% in the first.
  • RBI had projected 7.1% and the consensus market estimate was 6.8%.
  • GDP had in previous quarters been inflated by taxes on net subsidies and with subsidies declining, the contribution declined.
  • Taxes (net of subsidies) declined 8.7%
  • Gross Value Added (a better measure of of activity as it strips out taxes and subsidies that distorts GDP) rose to 6.8% from 6.3%.
  • Finance and real estate sectors are showing signs of slowing unsurprisingly given where interest rates are.
  • Retail, wholesale trade, general services and transportation all softened.
  • With both the GDP and GVA releases below the BI’s 2024 forecast, it is reasonable to expect that the BI will move to a more accommodative stance at the next meeting.
  • Today’s PMI print could give further insight the future direction of monetary policy.

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