GDP growth projection for Q2 and what it means, in charts

livemint.com:

RBI’s) 6.5% forecast—but both indicate a moderation from the June quarter’s 7.8% growth, primarily because the favourable base effect is fading out. Sequentially, economic activity is likely to have remained strong despite the risks, economists said.

The resilience in growth will likely be “underpinned by domestic consumption, high levels of capital expenditure, and strong growth in the utilities sectors", Barclays said in a report last week. Even as growth is expected to outpace RBI’s projection in the second quarter, economists’ median estimate for the full year at 6.2% is slightly lower than the central bank’s prediction of 6.5% given last month.

A back-of-the-envelope calculation suggests RBI expects GDP growth to be an average of 5.9% in the second half of the year, while economists’ prediction puts it around 5.1-5.2%. According to ICRA, the impact of uneven monsoon rainfall, narrowing difference with year-ago commodity prices, possible slowdown in capital expenditure ahead of elections, weak external demand, and the cumulative impact of monetary tightening could result in slower growth in the second half.

While mining, manufacturing, electricity generation and construction are expected to see better growth in the second quarter, services sector may see a moderation. But despite the moderation, it is likely to remain the biggest contributor to GDP growth, as per Barclays estimates, which expects services sector growth to be around 7.7%.

In the June quarter, services had grown 10.3%, outpacing growth of 4.7% in manufacturing and 7.9% in construction. Strong growth is also expected from construction, mainly due to robust capex by both central and state governments and lesser disruption in the monsoon months due to low