Equity markets* have rebounded smartly after a five-month slide, fuelled by expectations of a consumption revival. Optimism hinges on real GDP accelerating to 7.6% in the fourth quarter of 2024–25, led by a projected surge in private consumption. But beneath the surface, household finances remain fragile and growth in demand elusive.The implied 9.9% consumption growth for the March quarter, following an average of 7% in the first three quarters, looks increasingly unrealistic. Rural wages, urban sentiment, discretionary spending and employment trends all point to a subdued household economy. The consumption narrative the market is betting on may not hold up.
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