Surprising Surge: India's GDP Rises Beyond Expectations
India's economy grew by 7.8% year-on-year in the April-June quarter, surpassing the anticipated 6.7%. Despite this growth, economists predict challenges ahead due to increased U.S. tariffs affecting exports and investment, although GST cuts may offer some relief from economic strain.
In an unexpected turn, India's economy expanded by 7.8% year-on-year during the April-June quarter, a marked increase from 7.4% growth in the previous quarter. This development defied predictions from economists surveyed by Reuters, who expected a slowdown to 6.7% due to impending challenges.
Madhavi Arora, Lead Economist at Emkay Global, cites temporary boosts in GDP from an unusually soft deflator, increased government spending, and expedited exports to the U.S. as reasons behind this growth. However, Arora warns that these positive factors may soon dissipate, especially with the 50% tariff increase from the U.S. potentially affecting Indian exporters and jobs.
Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, indicates that, despite current success, the future remains uncertain with expectations of slowed exports and production delays in anticipation of GST rate cuts. Economists like Bhardwaj anticipate policy measures to mitigate these challenges and maintain economic momentum.
(With inputs from agencies.)
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