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Nomura predicts India's GDP growth will decline to 6% in FY25.

Economy Business | Dated: 07 Jan 2025

On January 3, 2025, Japan's brokerage firm Nomura predicted that India's economy will grow at a slower pace in the coming years. The updated forecast suggests that India's GDP (Gross Domestic Product) growth will slow down to 6% in the Financial Year 2024-25 (FY25), which is a sharp decline from 8.2% in FY24. In FY26, GDP growth is expected to be around 5.9%.

🎯 Key Highlights:

  • - Earlier, growth predictions for FY25 and FY26 were 6.7% and 6.8%, respectively, but the slowdown is attributed to several economic indicators reflecting an overall decline.
  • - Inflation The Consumer Price Index (CPI) inflation is expected to drop to 4.9% in FY25, down from 5.4% in FY24, and further reduce to 4.3% in FY26.
  • - For FY25, weaker growth is expected in high-demand sectors like cars and paints, while sectors like two-wheelers (2Ws) and essential goods are likely to grow stronger.

💡 Other Important Facts:

  • (i) In FY26, most consumer sectors are projected to grow below the long-term average, with premium segments capturing a larger share of the market.
  • (ii) Due to weaker demand and growing competition, companies may face higher risks to their profit margins, so investors will need to be very careful and selective in FY26.
  • (iiI) The agency pointed out that most companies were able to pass on the higher costs of raw materials (commodities) to consumers after COVID, thanks to strong demand for their products. This trend is expected to continue until 2025.

📚 Test Your Knowledge:

Which brokerage firm recently predicted that India's GDP growth will decline to 6% in FY25?

Correct Answer: Nomura

🚀 Quick Recap:

About Nomura

  • CEO: Kentaro Okuda
  • Headquarters: Tokyo