India's economy likely reverted to an annual growth rate of 6.2% in the third quarter, following on from double-digit growth in Q2, yet declining exports and investment could hamper future activity.

According to a Reuters survey, India's economy registered 13.5% growth in the second quarter from a year earlier, mainly because of the pandemic-fuelled restrictions during the same three months last year.

However, the economy is forecast to slow further as the central bank is hiking rates to curtail inflation running above the 2% to 6% target.

According to a Reuters poll of economists, the annual growth forecast of 6.2% for the latest quarter was marginally lower than the Reserve Bank of India's 6.3% prediction. Forecasts ranged from 3.7% to 6.5%.

"The exceptionally favourable base of the April-June '22 quarter is behind us, which will result in a normalization of the year-on-year real GDP growth rate from July-Sept '22 onward and also make it easier to gauge the true underlying economic momentum," according to Kaushik Das, India and South Asia chief economist at Deutsche Bank.

Although weaker economic activity was signalled in most major economies according to business surveys, with rate hikes to tame inflation, business sentiment in India has remained comparatively robust.

That said, industrial production rose at an annual 1.5% pace on average during the last quarter, a two-year low, indicating a considerable slowdown in manufacturing activity in the country, Reuters reports.

"GDP is expected to increase sequentially, led by continued recovery in services. Mining and manufacturing are expected to be a drag. On the demand side, lower global growth hit exports in Q2 (July-September)," said the principal India economist at HDFC Bank, Sakshi Gupta.

Last week, the finance ministry said a global slowdown might hamper India's export businesses outlook. The central bank increased its key policy interest rate to 5.9% from 4.0% in May and is forecast to add a further 60 basis points by the end of March.

"Between December and February, the headwinds to growth may become more evident," according to Deutsche Bank's Kaushik Das.