BackS&P retains India's FY24 growth forecast at 6%, citing global economic slowdown, rising monsoon risks
S&P Global Ratings retains India's growth forecast at 6% for the current fiscal due to global economic slowdown and subnormal monsoons.
PremiumS&P Global Ratings on 25 September retained India's growth forecast for the current fiscal at 6 percent citing slowing world economy, rising risk of subnormal monsoons and delayed effect of rate hike.
The rating agency sees the recent spike in vegetable price inflation as being temporary, but revised up the full fiscal retail inflation forecast to 5.5 percent, from 5 percent earlier, on higher global oil prices.
In its Economic Outlook for Asia Pacific Q4 2023 report, S&P said, “Growth this year will be weaker than in 2022, but our outlook remains broadly favourable. Notwithstanding the strong expansion in India in the June quarter, we maintain our forecast for fiscal 2024 (ending March 2024), given the slowing world economy, the delayed effect of rate hikes, and the rising risk of subnormal monsoons."
For the financial year 2022-23, India's growth rate came in at 7.2 percent, higher than the RBI's estimate of 7 percent. However, the pace of growth was slower as compared to the 9.1 percent recorded in FY22.
Coming back to S&P, the rating agency retained its growth forecast for the current fiscal at 6 percent, S&P also maintained that India's economy will grow 6.9 percent in both 2024-25 and 2025-26 fiscal years. Moreover, it added that India's consumption growth as well as capital expenditure remained "strong" in the June quarter.
With regard to growth in the Asia Pacific region, S&P said it remains a "multi-speed region" and slightly raised its forecast for 2023 to 3.9 per cent amid domestic resilience.
"In all, growth in the region has generally remained resilient. Year-on-year GDP growth picked up in the second quarter in both developed and emerging Asian economies. India led again, with GDP growing 4.2 per cent quarter on quarter to a level 7.8 per cent up on a year ago," S&P said.
Earlier on 20 September, India Ratings and Research revised India's GDP growth estimate for FY24 to 6.2 percent from 5.9 percent projected earlier, citing sustained government capex, deleveraged balance sheet of corporates and banking sector, and the prospect of a new private corporate capex cycle. It, however, cautioned that the Indian economy faces challenges from slowing exports, which contracted during the April-July period amid global headwinds and deficient monsoon.
(With inputs from PTI)
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