S&P Global Ratings hiked Bharat’s gross domestic product (GDP) growth
rate forecast for 2023-24 (FY24) to 6.4 per cent from 6 per cent earlier.
However, for FY25, the GDP growth projection has been slashed by 50 basis
points (bps) to 6.4 per cent.
S&P Global in its report Economic Outlook Asia-Pacific Q1 2024:
Emerging Markets Lead The Way said, “We have revised up our projection for
India’s GDP growth for fiscal 2024 (ending in March 2024) to 6.4 per cent, from
6 per cent, as robust domestic momentum seems to have offset headwinds from
high food inflation and weak exports.”
The report added, “Still, we expect growth to slow in the second half of
the financial year amid subdued global growth, a higher base, and the lagged
impact of rate hikes. As a result, we have lowered our outlook for growth in
fiscal 2025 to 6.4 per cent from 6.9 per cent.”
S&P Global added that the fixed investment in the nation has
recovered more than private consumer spending. However, the agency’s estimate
is lower than the central bank’s 6.5 per cent.
For FY26, the agency has kept India’s GDP growth projection unchanged at
6.9 per cent.
On inflation, S&P Global said in FY24, India is expected to report
inflation of 5.5 per cent, under the Reserve Bank of India’s upper tolerance
limit of 6 per cent. In FY25, it is expected to be lower at 4.5 per cent.
India’s retail inflation touched a high of 7.4 per cent in July, mainly
due to high food prices. Since then, it has cooled down. In October, it was
recorded at 4.9 per cent.
In the latest monetary policy announcement, RBI Governor Shaktikanta Das
said India’s retail inflation is expected to be 5.4 per cent for FY24, with Q2
at 6.4 per cent, Q3 at 5.6 per cent, and Q4 at 5.2 per cent.
S&P Global said, “In India, there was a transitory spike in food
inflation in the July-September quarter, but it appears to have had little
effect on underlying inflation dynamics. Still, headline inflation remains
above the RBI’s target of 4 per cent, suggesting it will be a while before the
rate cycle turns.”
The projections in the report suggest that the repo rate is expected to
be unchanged at 6.5 per cent at the end of FY24. At the end of FY25, the repo rate, according
to S&P Global, is expected to be 5.5 per cent and 5.25 per cent at the end
of FY26.
The report further added that the Asia-Pacific region is expected to
report healthy growth this year.
“Overall, growth this year and next is on track to be the strongest in
emerging market economies with solid domestic demand: India, Indonesia,
Malaysia, and the Philippines,” it said.
Agency
