Goldman Sachs has boosted India’s GDP growth forecast for the 2023 calendar year by 30 basis points to 6.3%, driven by increased exports. Earlier in November, the firm had estimated the Indian economy to grow at a rate of 5.9%.

What Happened? Per a Mint report, Santanu Sengupta, an India economist at Goldman Sachs, credits the robust growth in services demand for this optimistic prediction.

He points to the 13-year high Services PMI (Purchasing Managers Index) of 62.0, domestic air passenger traffic surpassing pre-pandemic levels, and resilient services exports despite a global slowdown.

Despite a recent lull in private sector investment, Sengupta anticipates a surge in government expenditure, given the spending trends observed in January and February.

Goldman Sachs’ quarterly GDP growth predictions for 2023 stand at 4.9% for Jan-March, 6.5% for April-June, 5.9% for July-September, and 8.1% for October-December.

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The firm also foresees a positive trend in services exports and a continuation of lower merchandise imports, resulting in a net export boost in 2023. It projects real exports to grow over 4% year-on-year, with flat real import growth.

However, Goldman Sachs has downgraded India’s investment growth forecast to 7.9% for 2023, compared to the earlier 9% projection. The company expects a spike in government spending in the second half of fiscal 2023-2024 before the general elections in 2024, while private sector investment remains slow.

In contrast, the Reserve Bank of India anticipates a 6.5% overall GDP growth in 2023-24, with quarterly predictions differing from those of Goldman Sachs.

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