Despite global headwinds, Q1 growth seen resilient on demand, government capex
NEW DELHI: Despite facing significant headwinds from late onset of southwest monsoon and geopolitical uncertainties caused by lingering conflict in West Asia and uncertain tariff policies, growth momentum in April-June quarter is likely to have held up — aided by consumer spending, govt capex, robust growth in exports, along with manufacturing and construction sectors.Economists reckon gross domestic product (GDP) likely grew 7- 7.5% in Q1 FY2026-27, a tad slower than 7.8% in Q4 of 2025-26, though higher than 6.8% recorded in the corresponding quarter of the previous financial year. In its latest monetary policy review earlier this month, RBI pegged June quarter growth at 7%.The National Statistical Office (NSO) is scheduled to release official GDP data for Q1 on Monday.
However, economists anticipate a slight moderation in growth during subsequent quarters due to high base effect and the renewed hostilities in the Iran -US conflict, which could affect energy prices and corporate margins .HDFC Bank principal economist Sakshi Gupta expects Q1 headline print at 7.5% and nominal growth to cross 13%, as manufacturing and electricity propelled industrial growth, while the pass through effect of income tax and GST rate cuts sustained consumer spending on the demand side. “Quarterly earnings results showed the impact on profit margins due to higher input costs has been partly offset by higher volume sales with strong net sales in auto, consumer durables and power,” she added.DBS Bank senior economist Radhika Rao said high frequency indicators in Q1 suggest that the economy weathered geopolitical disruptions “better” than initially feared and clocked 7.5% growth. “Industrial activity accelerated, although demand for industrial fuels and downstream petroleum products remained soft following price adjustments.” Bank of Baroda chief economist Madan Sabnavis moderates growth expectations to 7% in Q1 as delayed monsoon, lower reservoir levels and aggravated heatwave conditions are likely to pull agricultural growth lower (3.5%) than 4.4% in Q1 of 2025-26. Although, agriculture growth is expected to pick up in the coming quarters.ICRA Ratings chief economist Aditi Nayar also expects growth to cool down to 7% in Q1 as profit growth of a large group of non-finance companies slowed vis – a vis Q4 FY2025-26, amid sizable losses experienced by oil companies.“The gross value added in services sector is expected to have slowed down, amid a broad – based deceleration across all sub -sectors,” she added.
