India Economic Forecast

GDP growth is projected to have remained roughly stable in the final three months of FY 2022 (January–March 2023). Compared to the prior three months, industrial output rose at a faster rate and the services PMI averaged at a higher level. Less positively, merchandise exports contracted at a faster rate. Turning to FY 2023, in April, inflation eased, and the composite PMI rose to an almost 13-year high. Less positively, unemployment rose and exports continued to plunge at a double-digit pace. In other news, imports of Russian crude oil rose to a record 1.68 million barrels per day in April, up more than six times year on year, according to data from Vortexa. Cheap Russian oil is likely helping to ease consumer and producer price inflation, boosting activity.

Inflation fell to 4.7% in April from 5.7% in March due to slower price rises for food plus fuel and light. Inflation should rise in the coming quarters despite past rate hikes and cooling pent-up demand. Key factors to monitor include oil prices, the currency, the monsoon and government export controls and subsidies.