India’s Q3 FY16 GDP growth likely slowed over continued weakness in domestic and external demand

India's Q3 FY16 GDP is forecast to expand by 7.3% y/y, slightly lower than Q2's growth of 7.4%. The persistent weakness in domestic and external demand is expected to have depressed the overall growth in Q3 FY16 and that the boost from inventory in the earlier two quarters went away. Growth of core sector Q3 was the lowest in any of the quarters in 2015, while the Index of Industrial Production is also expected to be lower in Q3 FY16.

In the IIP, it will be evident in the capital goods sector's weak performance and is also expected to be reflected in lower capacity utilisation. To project the year-on-year growth for Q3 is slightly difficult as the Central Statistical Organisation revised the nation's annual GDP data for the last four years without any quarterly breakdown.

"With the full-year FY15 growth rate having been revised down from 7.3% yoy to 7.2% yoy, revision of the data for the quarter ending December 2014 will materially impact the growth rate for the quarter ending December 2015. Nevertheless, we believe that while the economy has bottomed out, the recovery remains quite unsteady", says Societe Generale.