Key Points of S&P Maintains India’s Economic Growth Forecast at 6% for FY24:
- S&P Global Ratings has kept its forecast for India’s economic growth at 6% for the fiscal year starting April 1, which is expected to rise to 6.9% in the following year.
- India’s GDP is expected to grow by 7% in the current fiscal year, ending March 31, before slowing to 6% in the next fiscal year.
- India leads with an average growth rate of 7% in 2024-2026, and GDP is projected to rise to 6.9% in the following two financial years and to 7.1% in 2026-27.
- S&P expects the Reserve Bank of India to raise its already high policy rate further following a recent upside surprise to inflation.
- The rating agency noted that domestic demand has traditionally led India’s economy, but it has become more sensitive to the global cycle lately, in part due to rising commodity exports.
- S&P believes that China’s economy is on track to recover this year, with a GDP growth forecast of 5.5% this year.
- S&P Global Ratings maintained a “cautiously optimistic outlook for Asia-Pacific,” but highlighted that the current account balances of energy-importing economies in the region have deteriorated, and pronounced core inflation in India suggests little slack in these economies.
Details of S&P Maintains India’s Economic Growth Forecast at 6% for FT24:
S&P Global Ratings has maintained its forecast for India’s economic growth at 6% for the fiscal year starting April 1, which is expected to rise to 6.9% in the following year. In its quarterly economic update for Asia-Pacific, the rating agency predicts that the inflation rate will ease to 5% in the 2023-24 fiscal year from 6.8% in the current financial year.
India’s GDP is expected to grow by 7% in the current fiscal year, ending March 31, before slowing to 6% in the next fiscal year. According to S&P, India leads with an average growth rate of 7% in 2024-2026. GDP is projected to rise to 6.9% in the following two financial years, 2024-25 and 2025-26, and to 7.1% in 2026-27.
The rating agency noted that while domestic demand has traditionally led India’s economy, it has become more sensitive to the global cycle lately, in part due to rising commodity exports. The year-on-year GDP growth slowed to 4.4% in the fourth quarter of 2022. S&P expects the Reserve Bank of India to raise its already high policy rate further following a recent upside surprise to inflation.
S&P believes that China’s economy is on track to recover this year, with a GDP growth forecast of 5.5% this year, up from 4.8% in November. However, external pressure from rising US interest rates will likely lift interest rates. S&P predicts that the US and the Eurozone are likely to slow significantly in 2023, with only 0.7% growth in the US this year and 0.3% in the Eurozone.
S&P Global Ratings maintained a “cautiously optimistic outlook for Asia-Pacific,” but highlighted that the current account balances of energy-importing economies in the region have deteriorated. In India, the external deficit reached about 3-3.5% of GDP in 2022.
The rating agency also stated that pronounced core inflation in India suggests little slack in these economies. It expects India’s Consumer Price Index (CPI) inflation to moderate to 5% in fiscal year 2024, but anticipates upside risks, including from weather-related factors.
About S&P Global:
S&P Global, a publicly traded American corporation, is headquartered in Manhattan, New York City, and specializes in financial information and analytics as its primary business domains.
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