Growth Prospects Brighten for Indian Economy

A German brokerage reports that India's GDP growth, which slowed to 5.4% in September, is expected to rise to 6.2% by December. The report suggests growth is rebounding but will remain below the potential 7% rate. Cautious optimism is advised, with potential rate cuts from the RBI in April.

The worst appears to be over for India's economic growth, according to a German brokerage report released Thursday. While GDP growth had hit a seven-quarter low at 5.4% in September, experts anticipate a rebound to 6.2% by December.

Deutsche Bank analysts suggest that despite this positive trend, GDP growth is expected to fall short of the 7% potential in FY26. They also warn that caution is warranted due to potential revisions in historical data, as the report was published shortly before official economic data releases.

The Reserve Bank of India is likely considering a 25 basis point rate cut in April to galvanize growth. Minutes from recent policy meetings show consensus on the need to lower restrictive rates. However, it’s unlikely more cuts will follow, with the central bank focused on liquidity measures, including a significant USD 10 billion swap announcement.