Archive · 2 Jun 2025
HSBC: India's Economy to Slow, Consumption to Lead Investment
Imagine India's economy is like a big bus, and HSBC, an economist, is saying it might slow down this year.
But don't worry, it's still going to be pretty strong.
Instead of businesses buying new things (investment), people buying stuff (consumption) will be more important.
HSBC thinks that the money people spend on things like food, will be really important.
Some people are doing better, some not so much, but the economist thinks things are changing.
The economist also predicts that the rate at which people take out loans may fall compared to last year.
It's a bit like the bus is changing how fast it goes, and who is paying to ride.
HSBC expects India's economic growth to slow in 2025-26.
Consumption is predicted to outpace investment in India this year.
HSBC lowered its real GDP forecast to 5.9% for FY26, below the Reserve Bank's estimate.
External uncertainties, including tariffs and weakening global demand, contribute to the forecast.
Informal sector consumption is expected to rise while formal sector consumption may fall.
- Who
- Pranjul Bhandari (HSBC Chief India Economist)
- What
- Slower economic growth forecast; consumption to outpace investment.
- When
- 2025-2026 (FY26)
- Where
- India
- Why
- External uncertainties, weakening global demand, and tariff-related concerns.
Economic Growth Drivers
Economic Slowdown
Consumption Sectors
Economic Growth Drivers
Informal sector consumption projected to increase due to factors like falling inflation.
Economic Slowdown
Formal sector consumption expected to slow, influenced by savings behavior.
- Real GDP Forecast (FY26)
- 5.9%
- Reserve Bank Estimate
- 6.5%
- Primary Driver of Economy
- Consumption
- Focus of Analysis
- India's economy