Economic growth slowed to 6.3% YoY in Q2 FY23 from 13.5% YoY in the previous quarter due to the waning of the base effect. Growth in Q2 was supported by continued recovery in private consumption led by services demand and festive-related boost. Meanwhile, government spending and net exports acted as drags on the overall pace of growth. We retain our projection of real GDP growth of 7% YoY in FY23 with downside risks emanating from global growth slowdown owing to tightening of financial conditions, volatile commodity prices, and spillovers from heightened geopolitical uncertainty. On the policy front, on-target growth and a recent moderation in inflation supports our view of a smaller rate hike in the next policy meeting.
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