Q1 GDP data: The good news and the not-so-good news

economictimes.indiatimes.com:

In such a scenario, how are serious economists to interpret the National Statistical Office's (NSO) April-June 2023 GDP estimates that were released yesterday? Well, with caution. On the face if it, Q1 growth of 7.8% looks strong, especially when compared to the rest of the world.

But think twice before jumping to any conclusions. (Read: buttress the analysis with more than the usual smattering of 'ifs' and 'buts'.)

After all, who would have imagined the US economy, which economists had agreed was on the verge of a recession months back, would firing on all cylinders? That, too, after the US Fed has raised interest rates to a 22-year high.

Or that the Chinese economy, long expected to roar back to growth, would stumble so badly post-Covid.

The reality, unfortunately, is that when it comes to reading the tea leaves from GDP estimates, even the best economists from redoubtable institutions like IMF and World Bank have been more off than (spot) on. Witness the number of times growth projections have been revised — both up and down.

RBI's Q1 GDP estimates have varied from 6.7% (Aug 2022) to 7.2% (Sept 2022) to 7.1% (Dec 2022) to 7.8% (Feb and April 2023), and finally 8% (June and Aug 2023).

So, with that caveat, look at the latest numbers, both at the overall and the disaggregated or sectoral level.

Overall, Q1 growth is in the 'satisfactory but can do better' zone. At 7.8%, it is a tad below RBI's estimate of 8%.