Investing.com -- BofA economists project India’s GDP growth for the first quarter of 2025 (Q4FY25) to be 6.7% year-over-year (yoy), indicating a gradual recovery from the 6.2% growth rate recorded in the previous quarter.
The anticipated increase is largely attributed to a fiscal boost from higher taxes and reduced subsidy payouts. The Gross Value Added (GVA), which measures sector-specific growth, is expected to slow to 6.0% yoy, suggesting a divergence between the two indicators due to the technical impact of fiscal changes on economic output.
According to BofA, the expenditure side of the economy will likely exhibit modest underlying demand, with consumer spending expected to decelerate slightly.
However, capital expenditure (capex) is predicted to increase, bolstered by a late surge in public capex during the first quarter of 2025. Sectors such as agriculture, construction, and public consumption are forecasted to maintain robust performance.
Despite the anticipated growth in the first quarter, BofA analysts have revised down their projection for GVA growth to 6.0% yoy from the previously estimated 6.2%.
If these projections hold true, India is on course to achieve a 6.3% GDP growth rate for the fiscal year 2025, which is slightly below the Ministry of Statistics and Programme Implementation’s (MOSPI) second advanced estimate and the Reserve Bank of India (NSE:BOI)’s (RBI) official forecast of 6.5%.
Looking ahead to the fiscal year 2026, BofA expects GDP growth to remain unchanged at 6.3%. The nominal GDP growth rate for the first quarter of 2025 is estimated to rise by 9.8% yoy, which is in line with the 9.9% yoy growth seen in the fourth quarter of 2024.
The official GDP figures for Q1 2025 are set to be released on May 30, which will provide further insight into India’s economic trajectory.