Unexpected Deterioration In Manufacturing Sector Drags Down 2QFY23 GVA Growth

Here's a quick synopsis on the Q2 gdp numbers by Nikhil Gupta, Chief Economist, MOFSL group.

• Real GDP growth of 6.3% YoY broadly in line with expectations.
• India grew 6.3% YoY in 2QFY23, broadly in line with the market consensus. PVR consumption and investments grew strongly at 9.7%/9.2% but government consumption declined.
• Real GVA growth of 5.6%, however, was weaker. Interestingly, services and farm sectors grew faster than expected, while manufacturing contracted unexpectedly in 2Q.
• Further, implied gross domestic savings were just 26.2% of GDP in 1HFY23, the lowest in 19 years (in 1H of all years). High inflation has pulled down savings, supporting consumption/growth.
• Going forward, real GDP growth is likely to be ~4.5% YoY in 2HFY23, leading to 7% growth in FY23.
• Today's data is unlikely to influence RBI monetary policy. Though the consensus is a hike of 35bps on 7th Dec, a 50bp hike cannot be ruled out. US payroll data on 2nd Dec will be a decider.