It’s going to be an important week in terms of key data announcements. The street will be watching out for inflation numbers as well as industrial production numbers. The Forex reserves data will also be announced this week.
Key economic data/ announcements this week
Industrial Production: The industrial production data will be released on March 12 (Wednesday). The industrial production, measured by the Index of Industrial Production (IIP) had eased to 3.2 per cent in December, after rising to a six-month high of 5 per cent in November, according to the data released by the Ministry of Statistics & Programme Implementation. Per a report by Union Bank of India, it is likely to surge to 3.7 per cent year-on-year in January 2025. This, it added, will be attributed to an overall rise in industrial activity. However, despite this monthly increase, the IIP growth in January is likely to be lower compared to 4.2 per cent recorded in January 2024.
CPI Inflation: The Consumer Price Index (CPI) data for February will be released on March 12, 2025 (Wednesday). In January, India’s retail inflation, based on the CPI, stood at 4.31 per cent, dropping significantly from 5.22 per cent in December. According to a median of 15 estimates drawn by FinancialExpress, February CPI inflation will likely decline to a six-month low of 3.9 per cent primarily due to cooling vegetable prices. Radhika Rao, senior economist, DBS Bank, said, “Broad-based moderation in food inflation, led by perishables, is likely to be the main reason behind slower headline print in February.” However, she maintained that the deceleration in vegetables is likely to hit a hurdle heading into the summer months as the IMD (India Meteorological Department) cautioned over upcoming high temperatures.
Foreign Exchange Reserves: The Reserve Bank of India (RBI) will release forex reserves data on March 14 (Friday). On Feb 28, RBI had stated that forex reserves jumped by $4.758 billion to $640.479 billion in the week ended February 21. In the previous reporting week, the overall reserves had dropped by $2.54 billion to $635.721 billion. In terms of trade balance, BofA Securities said, “After the material improvement in trade balance seen in December trade data, January trade data appears to have sustained the gains made in December, posting a trade balance of $22.9 billion, in line with the $21.9 billion seen in December.”
“While export growth weakened at -2.4 per cent YoY, import growth accelerated 10.3 per cent YoY, while on a sequential basis, import growth de-grew by 1 per cent mom. Gold imports stayed low in January at $2.7 billion, while oil related imports weakened marginally to $13.4 billion. On services, exports have risen 13.3 per cent to $320 billion in the same period, while imports are up 13.8 per cent to grow to $167 billion, for a surplus of $153.2 billion from April-January of this fiscal year,” the brokerage firm said.
Outlook on FY25 GDP
Meanwhile a lot of attention is on how all this data adds up in terms of the final GDP reading for FY25. Bank of America Securities maintained, “GDP growth remains on a path of gradual slowdown, with growth for FY25 expected now at 6.3 per cent, likely recovering to 6.5 per cent only in FY26.” The key reasons for this downward revision is “fiscal spending coming off in FY26, and monetary indicators likely to work with a lag, the growth improvement is likely to be seen in the light of trends normalizing around 6.5-7.0 per cent growth, which is close to trend growth in India.”
“ The budget and RBI’s actions may stabilize household sentiment, but we see signs of growth stabilizing around 6.5 per cent GDP growth as the baseline,” said Rahul Bajoria, Head of India and ASEAN Economic Research, BofA Securities.
The brokerage firm maintained that the gap between demand and supply side indicators continues to remain intact, with supply indicators like cement production, freight traffic, fuel consumption holding up, while credit demand, auto sales, GST collections turning a bit more tepid after a small jump in the year end. One bright spot, per the analysis report, is rural indicators which continued to display solid momentum.
A report by Crisil also stated that India’s real GDP growth is expected to be steady at 6.5 per cent in fiscal 2026, despite uncertainties stemming from geopolitical turns and trade-related issues led by tariff actions by the US.