Goldman Sachs Raises India's 2023 GDP Forecast To 6.3%

The brokerage had earlier projected GDP growth at 6% for 2023.

<div class="paragraphs"><p>A market in India. (Photo by <a href=";utm_medium=referral&amp;utm_content=creditCopyText">Tejj</a> on <a href=";utm_medium=referral&amp;utm_content=creditCopyText">Unsplash</a>)</p></div>
A market in India. (Photo by Tejj on Unsplash)

Goldman Sachs Group Inc. raised the Indian economic growth forecast by 30 basis points for 2023, citing a boost in net exports.

India's GDP growth forecast was increased to 6.3% year-on-year for the calendar year 2023 from the 6% it predicted earlier.

The brokerage expects GDP growth of 4.9% for the first quarter of 2023, compared to a Bloomberg estimate of 5.1%.

"On a year-on-year basis, our Q2-Q4 CY23 GDP growth forecast is 6.5%, 5.9%, and 8.1%, respectively, versus 9.4%, 5.4%, and 5.7% (forecasted) previously," it said.

The Rationale Behind The Raise

Goldman Sachs expects a strong trend in services exports, while the trend of lower merchandise imports is likely to continue, leading to a net export boost in 2023.

Real exports may grow above 4% year-on-year, while flat real import growth may be seen in 2023, it said.

Capital Expenditure Push

However, the brokerage lowered the country's investment growth forecast to 7.9% year-on-year in the calendar year 2023, compared to 9% year-on-year earlier.

The central government is currently leading most of the capex push for the economy, while private sector investment remains tepid, it said.

Goldman Sachs expects a pick-up in government expenditure in the second half of fiscal 2023–2024 before the general elections in 2024.

Goldman Sachs stressed the "pockets of strength" in service demand, as the services PMI clocked a 13-year high of 62, domestic air passenger traffic exceeded pre-pandemic levels, and service exports held up despite a slowdown in global growth.

But the demand for private sector investment, the brokerage said, has remained muted, as seen by a slowdown in industrial credit growth, led by large industries, in recent months.

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