On the Q2 GDP data, global brokerage Bank of America Corporation (BofA) said, “With the headline GDP growth coming in stronger than ours and Street expectations, we raise our GDP estimate for FY26 to 7.0% from 6.8%, but maintain our relative caution on the GDP growth outlook in FY27, expecting a modest slowdown in growth to 6.5% in FY27.”
BofA noted that India’s Q2 GDP strength is ‘unlikely to reduce future anxiety’. According to BofA, the moderation represents risks of growth downsides emanating from risks of trade tariffs by US for longer, the effects of tax cuts fading at the margin, and recent consumption frontloading, which can pay back in coming months.
“While commodity prices and terms of trade remain low, and monetary policy is expected to ease further, we believe GDP growth will have upside risks from removal of tariffs, potential for more expansionary fiscal measures and ongoing stability in domestic spending, while downside risks may emanate from more trade measures,” said BofA on India’s GDP print.