Nomura sees India GDP growth slowing sharply to 5.8% in 2025 vs 6.5% in 2024

MUMBAI : Nomura expects India's GDP growth to moderate to 5.8% on year in 2025, lower than the consensus estimate of 6.7%, the broking firm said in its latest global macroeconomic outlook. India's GDP growth in Jul-Sept dropped to 5.4% on year, and the firm anticipates sub-6% growth readings in the upcoming quarters as well. "The Reserve Bank of India has so far strongly resisted the view that a more protracted slowdown is underway, instead asserting that growth is on the mend regardless of the shock GDP growth slump in Q3 2024 (Jul-Sept) to 5.4%, hence obviating the need for any policy easing," the firm said in its report.

Nomura believes this deceleration, combined with softer inflation and muted second-round effects, could prompt the RBI to adopt a deeper rate-cutting cycle of 100 basis points starting February. This outlook diverges significantly from the broader consensus, which expects rate cuts of just 50 bps in 2025.

Nomura argues that the RBI's tight monetary policy is deepening the cyclical slowdown. The central bank's decision to maintain elevated real rates may delay the recovery.