An economic slowdown refers to a period of reduced economic growth — where GDP growth rate decelerates but remains positive — as opposed to a recession, which involves two consecutive quarters of negative GDP growth. In India, economic slowdowns are characterised by falling industrial production (IIP), declining private consumption expenditure, lower credit growth, rising unemployment, and reduced corporate earnings. Causes include tightening monetary policy (RBI rate hikes), global demand weakness, domestic supply disruptions, poor monsoon seasons affecting rural consumption, or fiscal consolidation. For equity investors, economic slowdowns typically lead to earnings downgrades across cyclical sectors — such as automobiles, real estate, capital goods, and consumer discretionary — while defensive sectors like FMCG, healthcare, and IT services with export revenues tend to be more resilient. India's GDP growth has experienced slowdowns in 2019-20, 2020-21 (COVID), and certain quarters of 2022-23 due to inflation and global headwinds.
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