S&P Global Ratings on Monday retained India’s growth forecast for FY24 at 6 per cent on the back of good growth in April-June quarter. However, this is lower than all the recent revised forecasts and RBI’s estimate of 6.5 per cent. The agency has upped its inflation forecast for India by 50 basis points.
S&P Global Ratings has estimated that India will grow at 6.9 per cent, 6.9 per cent and 7 per cent during FY25, FY26 and FY27, respectively.
Notably, S&P Global Market Intelligence, a division of S&P Global, recently upped India’s growth forecast for FY24 to 6.6 per cent due to strong growth in the April-June quarter, up from the 5.9 per cent projected in August.
The Organization for Economic Cooperation and Development (OECD) has raised India’s GDP forecast for 2023-24 to 6.3 per cent from 6 per cent projected earlier.
Previously, Fitch Ratings raised its growth forecast to 6.3 per cent for the current fiscal year from 6 per cent . However, ADB lowered the growth to 6.3 per cent from 6.4 per cent.
In its report titled, ‘Economic Outlook Asia-Pacific Q4 2023: Resilient Growth Amid China Slowdown’, S&P Global observed robust consumption growth in India along with Hong Kong, Indonesia, Taiwan, and Thailand.
It also highlighted strong capital expenditure growth in India along with Australia, Malaysia and New Zealand.
“Year-on-year GDP growth picked up in the second quarter in both developed and emerging Asian economies. ,” Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings said.
On Inflation, Kuijs said that the increases in global oil and food prices, combined with jumps in vegetable prices, raised consumer inflation by a large margin. It was 6.8 per cent in August, above the Reserve Bank of India’s upper tolerance limit of 6 per cent.
“While we see the vegetable price inflation as being temporary, we have revised up our full fiscal year consumer inflation forecast for India to 5.5 per cent from 5 per cent earlier,” he said.
On overall Asia Pacific region, Kuijs said the Asia-Pacific remains a multi-speed region. China is nursing its property downturn. The region’s developed economies are so far undergoing soft landings, with low but positive growth. Meanwhile, Asia’s emerging market economies are poised for robust expansions.
“We have cut our China growth forecast for 2023 to 4.8 per cent, from 5.2 per cent, and that for 2024 to 4.4 per cent, from 4.8 per cent. For the rest of the region, domestic resilience has caused us to slightly increase our forecast for 2023 growth to 3.9 per cent, and we maintain it at 4.4 per cent for 2024,” he said.