On the expenditure side, exports performed well despite global headwinds, while imports recorded their slowest growth since December 2020, primarily because of easing crude oil prices bringing down India’s import bills. In fact, strong growth in manufacturing proved to be a reassuring development as modest growth in the sector in previous quarters had been a concern for policymakers. 2 While the overall growth was broad-based, many sectors such as construction and agriculture experienced more-than-expected growth. India grew by 6.1% in the last quarter, which is approximately ~100 bps higher than what the market had anticipated. Indian economy enters a Goldilocks period-not too good, not bad either The recently released Annual Economic Review for the month of May 2023 highlighted that the postpandemic quarterly trajectories of consumption and investment have crossed prepandemic levels. The GDP growth in the fourth quarter has pushed up the full-year GDP growth of FY2022–23 to 7.2%, 200 basis points (bps) higher than the earlier estimate. The last quarter’s GDP data was pleasantly surprising but not completely unexpected. India, meanwhile, enjoys a Goldilocks moment as it sees its economic activity gaining momentum amid continuing global uncertainties. Risk spreads are declining on both sides of the Atlantic after the recent banking crisis in the United States. Labor markets in several advanced countries remain tight, while the largest economy, the United States, is seeing a rebound in consumer confidence and spending. We are halfway past 2023 and, while the world is still in the woods, the probability of a recession this year has trimmed. This year began with the anticipation that runaway inflation, aggressive policy rate hikes, and high commodity prices might topple a few major economies into recession in 2023.
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