India’s GDP Growth Slumps to Seven-Quarter Low: Data Explained in Five Charts

India’s GDP Growth Slumps to Seven-Quarter Low: Data Explained in Five Charts

India’s GDP growth rate for Q2 FY25 has slipped to a seven-quarter low of 5.4%, down from 6.7% in the previous quarter. The slowdown, driven by weaker performance across key sectors, reflects the challenges the Indian economy faces despite a few bright spots. Here’s an in-depth analysis of the data in five key charts.

1. Agriculture: A Revival Amidst Economic Turmoil

One of the few positives from the GDP data is the revival of the agriculture sector. Growth surged to a five-quarter high of 3.5% in Q2 FY25, compared to 2% in Q1. This uptick marks the third consecutive month of growth, signaling a turnaround for a sector critical to rural demand and employment.

2. Manufacturing and Mining: Sluggish Growth and Contraction

The manufacturing sector’s performance was lackluster, while the mining sector contracted for the first time in eight quarters. This contraction highlights the vulnerability of industrial activities amid global and domestic challenges. The utilities sector also showed negligible growth, adding to the subdued outlook for the industrial segment.

3. Capex and Consumption: Weak Demand Weighs on Growth

Investment growth declined sharply to a six-quarter low of 5.4%, down from 7.5% in Q1 FY25. This decline is concerning as it impacts long-term economic potential. On the consumption front, growth was subdued at 6%, barely an improvement over the 2.6% base in Q2 FY24, and significantly below the 7.4% recorded in Q1.

4. Exports: Growth Stalls Amid Global Headwinds

Export growth slumped to a mere 2.8%, a steep decline from 8.7% in Q1 FY25. With global demand under pressure and geopolitical uncertainties persisting, India’s export sector continues to struggle, further dragging down GDP growth.

5. Government Spending: A Glimmer of Hope

Government consumption showed a positive turnaround, rising 4.4% after a 0.2% contraction in the previous quarter. Increased public spending could provide a short-term boost to the economy, but sustained efforts are needed to revive overall demand.

The Bigger Picture

While the slowdown in GDP growth is alarming, some silver linings like the recovery in agriculture and increased government spending offer hope. However, challenges such as weak investment growth, subdued exports, and sluggish manufacturing need to be addressed urgently.

For a country with aspirations of becoming a $5 trillion economy, these numbers underline the need for robust policy measures to stimulate growth and sustain momentum across sectors.

Stay tuned for more insightful updates on India’s economy at TradingThought.